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Canada's economy is exhibiting signs of a slowdown, fueled by higher interest rates, raising speculation about the Bank of Canada's next rate decision. Economists predict the bank might maintain a 5 percent rate, as lower-than-expected September inflation figures and decreased retail sales suggest an economic cool-down.
Stephen Brown from Capital Economics raised concerns about a potential 5 percent decline in home prices over the next six months. An influx of new listings and cautious buyers could weaken GDP growth and reduce core inflation pressures. The higher savings rate among Canadians indicates that the interest rates are working as intended, leading to increased savings due to higher rewards amid raised rates.
This trend could be influenced by mortgage renewals, as Canadians prepare for higher costs or fail to qualify for additional borrowing. The decision to hold rates is not certain according to economists from National Bank. While September's inflation figures were softer, the inflation profile remains higher than what the Bank of Canada would prefer due to strong reports in August and July.
The Bank is left with no leeway to downplay its threat of further rate hikes despite clear signs of demand deterioration. Retail sales numbers reveal a significant reduction in consumer spending due to higher interest rates. There has been a 5.7 percent annualized sales decline when considering Canada's growing population, marking the worst pullback since the first pandemic lockdown.
InvestingPro data shows a market cap of 70.8M USD and a negative P/E ratio of -2.36, implying the company is not profitable. Revenue growth has been robust at 65.16% but has slowed down recently, as indicated by quarterly revenue growth of -86.25% for FY2023.Q2. The company's gross profit margin stands at 26.7%, which might be a cause for concern as it suggests weak gross profit margins.

(Reuters) -Workers at St. Lawrence Seaway Management Corp have decided to go on strike on Sunday after failing to reach an agreement on wages, the Canadian labor union Unifor said.
Unifor, which represents 361 workers at the government-established company, said no agreement had been reached with management after a late Saturday deadline passed.
"This impasse is extremely unfortunate, but our members remain committed to getting a fair agreement," Unifor National President Lana Payne said in a statement.
An orderly shutdown of the system took place during a 72-hour notice period allowing for vessels to safely clear the Seaway system, and the corporation remains in regular contact with the marine industry, St. Lawrence Seaway Management said in an emailed response to Reuters on Sunday.
"There are no vessels waiting to exit the system, but there are over 100 vessels outside the system, which are impacted by the situation," the statement added.
Unifor gave a 72-hour strike notice to St. Lawrence on Wednesday, demanding higher wages.
The strike would affect the St. Lawrence Seaway, which connects the Great Lakes and the St. Lawrence river, disrupting cargo movement towards Canadian provinces.