TH U RS DAY , J AN U ARY 16, 2020 | T HE GLOB E AND MAIL G R EPORT ON BUSINESS | B5

Bank of Japan downgrades DECLINE IN MANUFACTURING

HAS HURT EMPLOYMENT,
ESPECIALLY FOR MEN,

economic view for three regions STATISTICS CANADA SAYS

A Statistics Canada report re-

Lender stays positive,
suggesting domestic
demand could make
up for weak exports
and output caused by
the global slowdown
TETSUSHI KAJIMOTO TOKYO
The Bank of Japan cut its eco-
nomic assessment for three of the
country’s nine regions on
Wednesday, but remained cau-
tiously optimistic that domestic
demand could help offset a slow-
down in exports and manufactur-
ing.
All of the regions kept their as-
sessment on private consump-
tion unchanged, despite fluctu-
ations in spending patterns
around the Oct. 1 sales tax hike,
likely backing the BoJ’s rosy view
that solid domestic demand will
offset external headwinds. The
BoJ’s optimism will likely allow it
to justify keeping monetary pol-
icy steady for the time being.
“All nine regions reported that
their economies were either ex-
panding or recovering,” the cen-
tral bank said in the regional re-
port. “Domestic demand contin-
ued on an uptrend, with a virtu-
ous cycle from income to
spending operating in both the
corporate and household sec-
tors.”
The downgrades for the north-
ern region of Hokuriku, the cen-
tral region of Tokai – home to
Toyota Motor Corp. – and the
western area of Chugoku were
owing to weak exports and out-
put caused by the global slow-
down, which has slowed their
rate of expansion.
Still, Tokiko Shimizu, the Na-
goya branch manager overseeing
the Tokai region, said positive
signs were emerging, while the
impact of the sales tax hike will
be limited.
Demand for machine tools
from the United States and China
appeared to be bottoming out,
adjustments in car output and in-
Pedestrians cross a ventories in China were making
bridge in Nagasaki, steady progress, and production
Japan, last November. of IT-related goods was recover-
Economic assessments ing, she said.
for the Tokai, Hokuriku “A moderate expansion will
and Chugoku regions continue in the Tokai region for
were slashed on the time being, but the economy
Wednesday. will be getting on a firmer footing
ED JONES/AFP as factors weighing on output and
VIA GETTY IMAGES exports taper from now on,” she
told reporters after the BoJ
branch managers’ meeting.
The central bank is likely to
slightly revise up its economic
forecasts for this fiscal year to
March at its policy review next
week, boosted by the govern-
ment’s latest spending package,
sources said.
The more optimistic outlook
comes from an improvement in
domestic demand, owing to
stronger corporate investment,
solid household income and em-
ployment, and an expected boost
from public spending.
The BoJ’s nine-member board
will also review its current fore-
casts for core consumer inflation
to hit 1.1 per cent in fiscal 2020
and to accelerate to 1.5 per cent
the next year, although big
changes to these projections are
seen as unlikely.
Projections of tame inflation
should further back market ex-
pectations that the BoJ will keep
monetary policy ultra-loose to
achieve its elusive 2-per-cent
price goal.
At the branch managers’ meet-
ing, Governor Haruhiko Kuroda
held to the BoJ’s view that the Ja-
panese economy will see moder-
ate growth despite weak exports
and output, hit by the global
slowdown and natural disasters
at home. Mr. Kuroda dropped few
hints on what steps the central
bank might take next, while re-
peating his readiness to ease fur-
ther as needed to achieve the in-
flation target. Mr. Kuroda also
said consumer inflation, which is
hovering around 0.5 per cent,
would accelerate toward 2 per
cent, even though it could be af-
fected for the time being by fall-
ing oil prices.
“We will adjust policy as neces-
sary to maintain momentum to-
ward our price stability target
while examining risks,” he said.
“We will not hesitate to take addi-
tional easing steps if risks height-
en to an extent that the momen-
tum toward the price target is un-
dermined.”
REUTERS
veals that the fallout from the
country’s shrinking manu-
facturing sector is affecting
employment and wage rates of
men and women differently.
In a report looking at the
impact of the decline in manu-
facturing, the agency says the
percentage of Canadian men
between the ages of 21 and 55
who were employed mainly full
time for at least 48 weeks fell by
five percentage points, from 63.6
per cent in 2000 to 58.6 per cent
in 2015.
Statistics Canada said the
drop in full-time employment
rates was generally more pro-
nounced in regions that saw
larger-than-average declines in
the relative importance of the
manufacturing sector.
It noted that men’s full-year,
full-time employment rates fell
by 10 percentage points or more
in the Ontario areas of Windsor,
Oshawa, St. Catharines-Niagara
and Kitchener-Cambridge-Wa-
terloo.
The decline in manufacturing
jobs has also meant lower real
wages for men, especially less
educated men.
The study said, from 2000 to
2015, a five-percentage-point
drop in the share of the pop-
ulation employed in manu-
facturing in a given region led
to, on average, at least a 6.9-per-
cent drop in the real weekly
wages of male employees in the
affected areas.
However, men with a high-
school diploma or less saw a
drop of at least 7.3 per cent,
compared with a decline of at
least 4.8 per cent for their coun-
terparts with a bachelor’s degree
or higher.
The report found little evi-
dence that the decline in manu-
facturing has meant a drop in
full-year, full-time employment
rates for women. Statistics Cana-
da said the factors behind the
gender difference remain to be
determined. The report also
found little evidence that the
manufacturing decline reduced
real wages for women.
THE CANADIAN PRESS

Goldman Sachs to set expense target after inflated costs GREAT GULF GROUP

contribute to missed profit expectations

ANIRBAN SEN
ELIZABETH DILTS MARSHALL
Goldman Sachs Group Inc. will
set an expense target at its inves-
tor day later this month, manage-
ment said on Wednesday, after
the bank missed Wall Street profit
expectations because of inflated
costs.
A big portion of Goldman’s
bloated expense line came from
setting aside another US$1.1-bil-
lion to cover legal and regulatory
costs related to the 1MDB Malay-
sian corruption scandal.
However, Goldman also spent
more on compensation, technol-
ogy, occupancy costs and profes-
sional fees, some of which per-
tained to new businesses, such as
the credit card it launched with
Apple Inc. and its transaction
banking business.
The bank’s operating expenses
rose 42 per cent in the fourth
quarter and 6 per cent for the full
year.
Over all, the bank spent 68 US
cents for every dollar of revenue it
produced in 2019, up from 64 US
cents a dollar the prior year. In-
vestors watch that efficiency met-
ric closely, to gauge how well a
company manages costs.
Several analysts quizzed chief
executive officer David Solomon
and chief financial officer Ste-
phen Scherr about costs on an
earnings call, asking when the
bank’s investments in various
businesses will start paying off.
Goldman spent roughly US$700-
million on growth initiatives in
2019, before taxes.
Management plans to offer an
expense target “in very concrete
terms” at its investor day on Jan.
TECK RESOURCES TO PAY $2-MILLION FOR SUNMINE SOLAR PROJECT IN B.C.
29, Mr. Scherr said.
He also said Goldman will
During the fourth move away from a US$5-billion
fresh annual revenue target it
quarter, Goldman’s outlined in 2017, confirming a
profit fell 26 per cent Reuters report from November.
to US$1.7-billion, or The bank will instead set mea-
US$4.69 a share, sures for returns and efficiency,
which better represent its goals,
from US$2.3-billion, Mr. Scherr said.
or US$6.04 a share Mr. Scherr also mentioned that
in the same period of its equity investments, which
of 2018. are investments the bank makes
with its own money, it dumped its
shares of Uber Technologies Inc.
and reduced the amount of
shares it owned in Tradeweb Mar-
kets Inc.
Goldman shares closed down
0.1 per cent to US$245.21 in after-
noon trading. During the fourth
quarter, Goldman’s profit fell 26
per cent to US$1.7-billion, or
US$4.69 a share, from US$2.3-bil-
lion, or US$6.04 a share in the
same period of 2018.
Analysts had expected a profit
of US$5.47 a share, on average, ac-
cording to the IBES estimate from
Refinitiv. Some said the bank beat
estimates by a stretch when ex-
cluding legal and regulatory pro-
visions.
All but one of Goldman’s four
new business units reported bet-
ter quarterly results.
Global markets, which houses
the trading business, reported
US$3.5-billion in revenue, up 33
per cent, owing to easy compari-
sons with the year-ago period.
The strong trading performance
mirrored trends at major rivals
JPMorgan Chase & Co., Citigroup
Inc. and Bank of America Corp.
The only sore spot for Gold-
man during the quarter was in-
vestment banking, where reve-
nue fell 6 per cent to US$2.1-bil-
lion, hurt by lower M&A advisory
fees, as well as a slowdown in cor-
porate lending.
Goldman changed its report-
ing lines this month in response
to long-standing requests for
more transparency from analysts
and investors. The new structure
offers more insight into consum-
er banking, a pillar of Mr. Solo-
mon’s strategy to offset sharp de-
clines in trading revenue over the
past decade or so.
That business is a tiny but fast-
growing part of Goldman Sachs. It
represented just 2.4 per cent of
the bank’s revenue in 2019, at
US$864-million, which was up 41
per cent from the prior year.
Evercore ISI analyst Glenn
Schorr characterized the results
as encouraging, because of Gold-
man’s revenue growth, its pro-
gress in building out new busi-
nesses and signs that it is getting
closer to resolving 1MDB matters.
The government of former Ma-
laysian prime minister Najib Ra-
zak set up the 1MDB fund in 2009,
and the U.S. Justice Department
estimated US$4.5-billion was mis-
appropriated by high-level fund
officials and their associates be-
tween 2009 and 2014. Goldman
has been investigated by regula-
tors in at least 14 countries for its
underwriting role.
Mr. Solomon said the bank is
actively engaged with authorities
to settle as quickly as possible, al-
though he cautioned that there is
no guarantee of a settlement or
when one might occur.
REUTERS
GOLDMAN SACHS (GS)
CLOSE: US$245.21,
DOWN 45 US CENTS
ILIAS KONSTANTOPOULOS
Great Gulf Group is pleased
to announce the appointment
of Ilias Konstantopoulos as
CEO, a successful real estate
executive with more than
30 years of experience in
operations, corporate finance,
mergers and acquisitions and
capital markets.
His past roles include CFO
at Granite REIT, Managing
Partner at Brookfield Financial,
Managing Director at BMO
Capital Markets, Auditing
and Taxation at Ernst &
Young and Structural Design
Engineer at Bechtel. Ilias holds
a Bachelor of Engineering
(B. Eng.), and Master of
Business Administration
(MBA) McGill University, is a
Professional Engineer (P. Eng.)
and is a Canadian Chartered
Accountant (CPA) and US
Certified Public Accountant
(US-CPA).
Established in 1975, the
Great Gulf Group of
companies is one of North
America’s premier real estate
organizations. With major
projects in Canada and the
United States, the company’s
fully-integrated activities span
the entire real estate spectrum.

VANCOUVER Mining company Teck
Resources Ltd. says it is purchasing the
SunMine solar electricity generating
facility in British Columbia from the
City of Kimberley.
The Vancouver-based company says it
has agreed to pay about $2-million,
matching the city’s debt associated with
the operation.
The 1.05-megawatt SunMine opened
in 2015 on reclaimed land at Teck’s
Sullivan Mine, which was closed in 2001
after producing zinc, lead and silver for
nearly 100 years.
But its earnings for the community
fell short of expectations, in part owing
to heavy smoke caused by summer
forest fires, and the city has been nego-
tiating to sell it to Teck for several
years.
Citizens voted in a referendum dur-
ing the October, 2018, municipal elec-
tion to sell the facility.
Teck chief executive officer Don
Lindsay says the company will use
SunMine to build firsthand experience
with solar power that could lead to its
implementation at other operations.
Teck is awaiting word from Ottawa
on whether it will be allowed to build
its proposed $20.6-billion Frontier oil
sands mine in northern Alberta, a pro-
ject that environmentalists say is in-
consistent with Canada’s greenhouse gas
emissions reduction policies. greatgulf.com
THE CANADIAN PRESS