Canadian Economic News, December 2024 Edition

Resources

• Calgary-based Suncor Energy announced that its 2025 capital program of between $6.1 billion and $6.3 billion would be balanced between investments in sustaining its business, while selectively investing in high value economic opportunities.
• Calgary-based Cenovus Energy Inc. announced that its 2025 corporate guidance includes capital investment of $4.6 billion to $5.0 billion, including about $3.2 billion of sustaining capital to maintain base production and support continued operations, with an additional $1.4 billion to $1.8 billion directed towards advancing the company's upstream growth projects.
• Calgary-based Pembina Pipeline Corporation announced its 2025 financial guidance, which includes a capital investment program of $1.1 billion which reflects ongoing construction of previously sanctioned projects, development spending on potential future projects in response to growing volumes across the Canadian energy industry, and sustaining capital.
• Calgary-based Vermilion Energy Inc. announced its capital budget would be between $600 and $625 million for 2025. Vermilion said the budget includes drilling and infrastructure capital allocated to all major business units, including ongoing drilling and debottlenecking on the British Columbia Montney asset and European gas exploration and development in Germany, Netherlands, and Central and Eastern Europe.
• Later, Vermilion Energy announced it had entered into an arrangement agreement to acquire Westbrick Energy Ltd. of Calgary for total consideration of $1.075 billion. Vermilion said the acquisition is expected to close in the first quarter of 2025.
• Vancouver-based Lundin Mining Corporation announced it had signed a definitive agreement to sell its Neves-Corvo operation in Portugal and Zinkgruvan operation in Sweden to Boliden AB of Sweden for up to USD $1.52 billion. Lundin said the transaction is anticipated to close in mid-2025, subject to the completion of customary conditions and regulatory approvals.

Economic and fiscal updates

• The Government of Canada released the 2024 Fall Economic Statement on December 16th, which included updates on investments to expand Canada's social safety net, build more homes, and reduce the costs of essentials; investments in wealth-generating research and development, and more support for Canada's innovators and start-ups; and an investment to secure the border. The Government forecasts a $48.3 billion deficit for 2024-25 and real gross domestic product (GDP) growth of 1.3% in 2024 and 1.7% in 2025.
• The Government of Manitoba released the 2024/25 Fiscal and Economic Update on December 16th. The Government forecasts a $1.3 billion deficit for 2024-25 and real GDP growth of 1.0% in 2024 and 1.6% in 2025.
• The Government of Nova Scotia released its second update on Budget 2024-25 on December 20th. The Government forecasts a $247.5 million deficit for 2024-25 and real GDP growth of 1.9% in 2024 and 2.0% in 2025.

Other news

• The Government of Newfoundland and Labrador announced it had signed a Memorandum of Understanding (MOU) with the Government of Quebec for hydroelectric generation in Labrador. The Government said the non-binding memorandum has two components: (i) new contracts with Churchill Falls (Labrador) Corporation (CF(L)Co) and both Hydro-Québec and Newfoundland and Labrador Hydro for existing Churchill Falls generation at a new price; and (ii) the development of new generation projects in Labrador.
• The Government of Manitoba announced was bringing in a permanent 10% cut to the provincial fuel tax and that the 12.5 cent per litre fuel tax rate will be applied to gasoline and diesel across the province beginning on January 1, 2025.
• The Bank of Canada reduced its target for the overnight rate by 50 basis points to 3.25%. The last change in the target for the overnight rate was a 50 basis points cut in October 2024. The Bank also said it is continuing its policy of balance sheet normalization.
• TD Canada Trust, RBC Royal Bank of Canada (RBC), BMO Bank of Montreal, Canadian Imperial Bank of Commerce (CIBC), Scotiabank, and Laurentian Bank of Canada announced they were decreasing their Canadian dollar prime lending rates by 50 basis points from 5.95% to 5.45%, effective December 12th.
• The Canadian Union of Postal Workers announced on December 16th that after almost five weeks of a nationwide strike, legal strike action would end on December 17th. Canada Post said it would restart operations on that date and begin the process of ramping up and stabilizing operations across the country.
• Montreal-based Lightspeed Commerce Inc. announced a reorganization to further optimize its operations and that this will impact approximately 200 individuals. Lightspeed said the majority of the restructuring charges will be incurred in the third quarter of fiscal 2025.
• Montreal-based Lion Electric company, a manufacturer of all-electric medium and heavy-duty urban vehicles, announced a reduction of its workforce through temporary layoffs of approximately 400 employees, in both Canada and the United States. Later, Lion announced that the Superior Court of Quebec had issued an initial order granting the Company and its subsidiaries protection under the Companies' Creditors Arrangement Act (CCAA). The company said that it and its subsidiaries also intend to seek recognition of the CCAA proceedings in the United States under Chapter 15 of the Bankruptcy Code.
• Toronto-based Softchoice Corporation and World Wide Technology Holding Co., LLC of Missouri announced they had entered into an arrangement agreement for Softchoice to be acquired by WWT, via an all-cash transaction, for an enterprise value of approximately $1.8 billion. The companies said the transaction is expected to close late in the first quarter or early in the second quarter of 2025, subject to shareholder and court approvals and customary closing conditions.

United States and other international news

• The U.S. Federal Open Market Committee (FOMC) lowered the target range for the federal funds rate by 25 basis points to 4.25% to 4.50%. The last change in the target range was a 25 basis points cut in November 2024. The Committee also said it will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities.
• The Reserve Bank of Australia (RBA) left the cash rate target unchanged at 4.35%. The last change in the cash rate target was a 25 basis points increase in November 2023.
• The European Central Bank (ECB) lowered its three key interest rates by 25 basis points to 3.00% (deposit facility), 3.15% (main refinancing operations), and 3.40% (marginal lending facility). The last change in the deposit facility was a 25 basis points reduction in October 2024. The ECB said it intends to discontinue reinvestments under the pandemic emergency purchase programme (PEPP) at the end of 2024.
• The Bank of England's Monetary Policy Committee (MPC) voted to maintain the Bank Rate at 4.75%. The last change in the Bank Rate was a 25 basis points cut in November 2024.
• The Executive Board of Sweden's Riksbank lowered the repo rate by 25 basis points to 2.50%. The last change in the repo rate was a 50 basis points reduction in November 2024.
• The Monetary Policy and Financial Stability Committee of Norway's Norges Bank left the policy rate unchanged at 4.5%. The last change in the policy rate was a 25 basis points increase in December 2023.
• The Bank of Japan announced it will encourage the uncollateralized overnight call rate to remain at around 0.25%.
• Organization of Petroleum Exporting Countries Plus (OPEC+) countries Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman announced they had decided to extend the additional voluntary adjustments of 1.65 million barrels per day that were announced in April 2023, until the end of December 2026. As well, the countries said they will extend their additional voluntary adjustments of 2.2 million barrels per day, that were announced in November 2023, until the end of March 2025 and then the 2.2 million barrels per day adjustments will be gradually phased out on a monthly basis until the end of September 2026.
• Illinois-based Arthur J. Gallagher & Co. announced it had signed a definitive agreement to acquire AssuredPartners of Florida for gross consideration of USD $13.45 billion. The company said the transaction is expected to close during the first quarter of 2025, subject to customary regulatory approvals.
• Türkiye-based Pegasus Airlines announced it had signed an agreement with The Boeing Company for 200 Boeing 737-10 aircraft. Pegasus said the total value of the contract for 200 aircraft is approximately USD $36 billion.
• Japan-based Nissan Motor Co., Ltd. and Honda Motor Co., Ltd. announced they had signed a memorandum of understanding (MOU) to start discussions and considerations toward a business integration between the two companies. The companies said they plan to establish, through a joint share transfer, a joint holding company that will be the parent company of both companies, subject to shareholder approval and approvals from relevant authorities for this business integration. The companies also said they had signed an MOU to explore the possibility of Mitsubishi Motors' participation.

Financial market news

• West Texas Intermediate crude oil closed at USD $71.72 per barrel on December 31st, up from a closing value of USD $68.00 at the end of November. Western Canadian Select crude oil traded in the USD $54 to $59 per barrel range throughout December. The Canadian dollar closed at 69.50 cents U.S. on December 31st, down from 71.38 cents U.S. at the end of November. The S&P/TSX composite index closed at 24,727.94 on December 31st, down from 25,648.00 at the end of November.