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Molson Coors Brewing CEO Swinburn to retire at year's end; Hunter named as successor

DENVER - Molson Coors Brewing President and CEO Peter S. Swinburn will retire at the end of the year.

The brewing company said Friday that Swinburn will be succeeded in the posts by Mark R. Hunter, who currently serves as CEO and president of Molson Coors Europe.

The 61-year-old Swinburn has served as CEO since 2008. Hunter, 51, has served as CEO and president of the company's European business since January 2013.

Swinburn will continue to lead the company until he retires and will help with the transition process.

Swinburn's retirement from his posts, as well as from his role as a board member, is effective Dec. 31. Hunter will become a director.

Molson Coors Brewing Co., which is based in Denver and Montreal, has brands including Coors Light, Molson Canadian, Carling and Blue Moon. Its Class B shares shed $1.01, or 1.4 per cent, to $72 in morning trading Friday.

The Canadian Press


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Settlement reached in a key dispute in Nortel Networks bankruptcy case

TORONTO - A last-minute settlement was reached Thursday in a key dispute in the Nortel Networks Ltd. bankruptcy case — over how much interest should be paid on Nortel’s outstanding bonds, according to documents filed in U.S. court.

The settlement, which will see U.S. bond holders collect up to US$1.01 billion in interest payments on outstanding bonds, still needs approval by the court, which will hear the matter in mid-September.

Nortel, which filed for bankruptcy protection in 2009, has $4.1-billion in outstanding bonds.

The Globe and Mail reported that U.S. bondholders had made written submissions to the court saying that interest should accrue at a contractual rate that would add up to at least $1.6-billion.

But Nortel’s Canadian monitor Ernst & Young and other creditors argued that any interest should have been calculated at a much more modest U.S. federal judgment rate, which would have capped payments at around $90-million, the Globe said. That would leave more for other creditors, including pensioners and former employees.

The compromise will see bondholders receive $876-million, plus as much as $134-million more if they have not been repaid by the middle of next year, according to the documents.

Lisa Schweitzer, a New York-based lawyer involved in the case, had no comment when reached on Friday.

The Nortel trial is considered one of the biggest bankruptcy cases in Canadian history. The cost of Nortel's demise has climbed above US$1 billion over the past five years, with legal expenses eating away at money that could be divided among the various parties.

At its height from 1999 to 2000, Nortel was worth nearly $300 billion, employed more than 90,000 people globally and was regarded as one of Canada's most valuable tech companies.

A related matter in the Nortel trial was still scheduled to go ahead in Toronto court on Friday.

The Canadian Press


National Energy Board orders Enbridge to cease work on pipeline in Manitoba

CALGARY - The National Energy Board has ordered Enbridge Inc. to stop work along its Line 3 oil pipeline in Manitoba after an inspection earlier this month revealed numerous environmental and safety concerns.

Line 3 has been carrying crude between Alberta and Wisconsin for nearly half a century. Enbridge announced plans earlier this year to replace the pipeline in its entirety — a $7.5 billion undertaking that would be the largest project in the company's history.

Company spokesman Graham White said Friday the NEB order relates to regular maintenance work on the existing pipeline around Cromer, Man., not the larger replacement project.

The NEB says it won't allow work to resume until it's satisfied the problems have been fixed by Enbridge (TSX:ENB).

"During the inspection of the project, it was observed that multiple construction mitigation measures committed to by Enbridge in its Environmental Protection Plan to conserve topsoil, control erosion and manage drainage were not implemented," the NEB said in its order.

That has resulted in "numerous non-compliances observed both on and off the construction right-of-way causing environmental damage to wetlands and property damage to a substantial amount of agricultural land."

The NEB order also said erosion, lack of safe access to agricultural land and open excavations and trenchlines pose safety hazards.

"The resumption of construction activities by Enbridge without a full assessment of damages would cause further detriment to property, safety of the public and the environment," it said.

Before work can continue, the NEB said Enbridge has to complete a detailed assessment of the safety and environmental issues and put together an action plan, with a detailed timetable, to address each item.

White said Enbridge has already started working on the issues flagged by the NEB and that safety concerns will be dealt with immediately.

He added flooding and heavy rainfall in late June hampered efforts to address the problems, which had been raised by a landowner and about which Enbridge was aware. The issues were related to land around the pipeline, not the pipeline itself, he said.

For the full Line 3 replacement project, White said Enbridge is holding open-houses in communities along the route and plans to submit a regulatory application by the end of this year.

The upgrade will allow the line to pump a maximum of 760,000 barrels per day, up from the 390,000 barrels it is currently able to move.

Follow @LaurenKrugel on Twitter

The Canadian Press


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Actor-director Ron Howard sells suburban New York house for a record $27.5 million

ARMONK, N.Y. - Now that they're empty-nesters, Ron Howard and his wife have sold their nest straddling the New York and Connecticut state line for $27.5 million.

Howard and his wife, Cheryl, bought the Conyers Farm estate in Greenwich, Connecticut, and Armonk, New York, in 1991 and spent years constructing the house and outbuildings.

The main house outside of New York City is more than 17,000 square feet and has six bedrooms, a swimming pool and a home theatre.

There's a 2,500-square-foot guest house, a "sports barn" with a tennis court and actual barns for horses.

The Wall Street Journal reports the sale closed Thursday. The buyer has not been identified.

The Howards have said they were selling because they travel frequently and their four children are grown.

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Information from: The Wall Street Journal, http://www.wsj.com

The Canadian Press


TransForce to create 'dominant' trucking company with $495M deal for Contrans

MONTREAL - Canada's largest trucking company, TransForce Inc., is set to become a national powerhouse in the specialized trucking business with a proposed friendly takeover of Ontario-based Contrans Group.

Contrans provides bulk, tank, flatbed and other transportation services in Canada and parts of the United States.

It's expected to complement the various types of services provided by TransForce subsidiaries that are involved in package and courier deliveries, trucking and waste management.

"This is really the creation of a dominant player in Canada," said TransForce chairman and CEO Alain Bedard.

The proposed transaction caused TransForce's shares to hit an all-time high of $27.64 in Friday trading on the Toronto Stock Exchange. They were up more than nine per cent or $2.28 at $27.46 in later trading.

The Montreal-based trucking company (TSX:TFI) announced late Thursday that it had struck a deal to acquire Contrans Group Inc. (TSX:CSS) for $495 million in cash plus $85 million of debt. That imples Contrans has an enterprise value of $580 million.

The board of Contrans, based in Woodstock, Ont., is unanimously supporting TransForce's offer of $14.60 per share cash, which is conditional on at least two-thirds of the outstanding class A and B shares being tendered. Contrans CEO Stan Dunford, 64, would join TransForce's board.

In addition to the money from TransForce, Contrans shareholders would receive a special dividend of 40 cents per share, bringing the total amount that they receive to $15 per share. Funds for the special dividend would come from the recent sale of the Contrans waste transportation segment.

Bedard said he expects to realize at least $15 million cost savings, partially from eliminating Contrans costs as a public company and $10 million in operational savings, without resorting to layoffs among Contrans' 1,400 employees.

Unlike past acquisitions of underperforming companies, TransForce views Contrans as a "lean and mean machine" that doesn't require any changes that could scare away key employees.

"I'm buying the company in my mind at a huge price. (It's) fair, agreed, but it's a lot of dollars, lots of investment. So I'm not going to change the recipe," Bedard said during a conference call with analysts.

The deal was consummated after financial advisers for Contrans approached TransForce with a price, which the company accepted. It represents a 16.7 per cent premium to the 52-week volume weighted average trading price but only 5.1 per cent premium to the value of shares over 10 days before the deal was announced.

Most analysts believe Contrans shareholders will approve the transaction, which is expected to close in the fall. But Maxim Sytchev of Dundee Securities said some shareholders may ask for more.

Bedard said he has no plans to go higher, preferring to turn his sights on the United States if Contrans shareholders balk.

He said the combination will create a more efficient company that will be good for the Canadian truckload industry. Contrans is the largest specialty trucker in Ontario while TransForce is strong in Quebec.

"It's going to be to the benefit of everybody: our employees, our customers, our shareholders," he said in an interview. "Combining under our own family is fantastic for everybody."

TransForce has engaged financial advisers about the possibility of spinning off the enlarged truckload business as a separate public company. It would one of the largest in North America with $1.8 billion in annual sales and $250 million in EBITDA.

The company is also looking to unlock the value of its profitable waste management business.

Benoit Poirier of Desjardins Capital Markets said the further consolidation of the Canadian trucking markets should improve TransForce's pricing power. He estimated the acquisition could add 15 to 20 cents per share in earnings for TransForce over the long term, representing $2 to $3 per share in value to the company's stock price.

Follow @RossMarowits on Twitter

The Canadian Press


US safety agency probes Hyundai Sonatas; electrical problem can cause air bag failure

DETROIT - U.S. safety regulators are investigating whether an electrical problem can knock out the air bags on some older Hyundai Sonatas.

The probe announced Friday covers about 394,000 midsize cars from the 2006 through 2008 model years.

The National Highway Traffic Safety Administration says it has received 83 complaints about the problem. The agency says a sensor inside the seat belt buckle might fail. This can cause the air bags to malfunction or not inflate if there's a crash.

The problem also can affect the mechanism that tightens the seat belts before a crash. The problem can happen in either the driver or passenger buckles. In most cases the air bag warning light came on.

Investigations can lead to recalls but none has been issued so far in this case.

Hyundai will co-operate with the NHTSA in its investigation, company spokesman Jim Trainor said in an email.

The Canadian Press


US safety agency investigates complaints of alternator failures in Dodge Chargers

DETROIT - The U.S. government's road safety agency is investigating complaints about engine stalling and alternator failures in Dodge Charger sedans.

The probe covers about 123,000 Chargers from the 2011 and 2012 model years.

The National Highway Traffic Safety Administration says it has 14 complaints of alternator failure and stalling. All the cases happened while the cars were going 40 or more miles per hour.

In one case a car stopped in traffic with smoke coming from the alternator, which generates electricity to recharge the battery and run other devices. No injuries have been reported to the agency.

Chrysler says it's co-operating in the probe. Investigations can lead to recalls but there haven't been any so far.

The Canadian Press


Canadian dollar lower amid strong U.S. durable goods data, geopolitical concerns

TORONTO - The Canadian dollar closed lower Friday while the greenback strengthened amid geopolitical concerns and data showing a rebound in U.S. durable goods orders.

The loonie fell 0.6 of a cent to 92.47 cents US as orders in the U.S. for durable goods, such as machinery, computers and related products and commercial aircraft, increased by 0.7 per cent during June. Orders had dropped one per cent in May.

The American currency also strengthened as geopolitical concerns continued to cast a shadow.

On Friday, European Union ambassadors reached a preliminary deal on stepped-up sanctions against Russia, targeting its access to European capital markets and trade in the defence sector, dual-use goods and sensitive technologies.

The ambassadors also ordered EU-wide asset freezes and travel bans for an undisclosed number of Russians and pro-Russian Ukrainians who are accused of undermining Ukraine’s sovereignty.

And U.S. officials accused Russia of firing artillery over the border into Ukraine.

U.S. bond yields also fell, with the benchmark 10-year Treasury down to around 2.48 per cent late Friday afternoon from 2.5 per cent on Thursday.

It is a very heavy week coming up for potentially market moving U.S. economic data with the latest reading on consumer confidence on Tuesday, U.S. second-quarter gross domestic product and an interest rate decision by the Federal Reserve on Wednesday, while the week ends with the Institute for Supply Management's manufacturing reading and the government's employment report for July.

In Canada, the major report is the May reading on gross domestic product coming out on Thursday.

On the commodity markets, September crude on the New York Mercantile Exchange edged up two cents to US$102.09 a barrel.

August gold gained $12.50 to US$1,303.30 an ounce, while September copper was down three cents at US$3.24 a pound.

The Canadian Press


Toronto stock market advances, up for week amid strong earnings reports

TORONTO - Gold stocks and financials helped give the Toronto stock market a lift Friday amid a rebound for U.S. durable goods orders and gold prices.

The S&P/TSX composite index gained 60.59 points to finish at a record high close of 15,455.04.

The gold sector was ahead about 3.3 per cent as the August gold contract gained $12.50 to US$1,303.30 an ounce after three days of losses.

The financials sector was up 0.59 per cent.

Meanwhile, the Canadian dollar shed 0.6 of a cent to 92.47 cents US as the greenback strengthened in the wake of U.S. data showing that orders for durable goods increased by 0.7 per cent during June.

U.S. markets were lower after earning disappointments from online retailer Amazon and Visa. The Dow Jones industrials dropped 123.23 points to close at 16,960.57 while the Nasdaq fell 22.55 points to finish at 4,449.56. The S&P 500 index lost 9.64 points to close at 1,978.34.

Amazon shares plunged 9.65 per cent to US$324.01 after posting a quarterly loss of US$126 million, or 27 cents per share, 14 cents worse than estimates. Revenue rose 23 per cent, but operating expenses also rose by a similar percentage.

Shares in Visa, which is closely watched because of its heavy exposure to U.S. and global consumer spending, dropped 3.58 per cent to $214.77 as the global payments technology company trimmed its forecast for annual revenue growth.

The Toronto stock market finished the week up 188.47 points or 1.24 per cent on positive Chinese manufacturing data and a series of positive earnings reports from Canadian National Railway (TSX:CNR), Teck Resources (TSX:TCK.B) and Loblaw Co. Ltd. (TSX:L). The Dow shed 132 points or 0.8 per cent.

Traders are optimistic ahead of next week as many of the big names in the Canadian resource sector prepare to report their second-quarter results.

"It's pretty solid by and large; hard to complain," said Bob Gorman, chief portfolio strategist at TD Waterhouse.

"If in Q1 we saw TSX earnings up around six per cent, Q2 is looking like about 15 per cent and that is probably, I would say, going to be the number for the year," Gorman said.

The industrials sector was ahead 0.48 per cent after Candu Energy Inc., an SNC-Lavalin (TSX:SNC) company, signed a co-operation agreement with China Nuclear Power Engineering Company Ltd. for the construction of two nuclear reactors at the Cernavoda Nuclear Power Plant in Romania. SNC rose $1.23 to $57.74.

The metals and mining sector gave back 0.27 per cent, returning all of the gain racked up Thursday in the wake of the strong report on Chinese manufacturing. However, the International Monetary Fund warned that global growth will be about three-tenths of a point lower at 3.4 per cent this year than it thought in April. September copper was down three cents at US$3.24 a pound after surging six cents Thursday.

The energy sector was down 0.37 per cent, while September crude on the New York Mercantile Exchange edged up two cents to US$102.09 a barrel.

The move came after U.S. officials accused Russia of firing artillery shells over the border into Ukraine.

Also on Friday, European Union ambassadors reached a preliminary deal on stepped-up sanctions against Russia, targeting its access to European capital markets and its trade in the defence sector, dual-use goods and sensitive technologies.

The Canadian Press


California state senator Yee charged with racketeering in San Francisco Chinatown crime probe

SAN FRANCISCO - A federal grand jury on Friday charged a California state senator with more felonies in addition to the eight counts he already faced in a sweeping organized crime and public corruption case centred in San Francisco's Chinatown.

A new indictment unsealed in San Francisco federal court charged Sen. Leland Yee with racketeering and conspiracy "to obtain property under the colour of official right." Those charges are in addition to the previous bribery, conspiracy and related charges.

Yee pleaded not guilty to the original eight charges. He will have to enter a plea Wednesday to the charges in the new indictment.

The new accusations allege that San Francisco Democrat offered to help pass legislation making it harder for professional football players to obtain workers compensation in California, in exchange for campaign contributions from an unidentified NFL owner.

The new indictment also accuses Yee of taking bribes in exchange for votes in favour of several bills, including one on medical marijuana and another to extend the life of the California State Athletic Commission.

Also charged with racketeering was Raymond "Shrimp Boy" Chow. The grand jury called a Chinese-American association that Chow headed, the Ghee Kung Tong, a racketeering enterprise.

Chow previously pleaded not guilty to money laundering and other charges.

Yee also is accused of accepting bribes and attempting to connect an undercover FBI agent with an arms dealer in exchange for cash. He has pleaded not guilty.

A call to Yee's attorney for comment on the additional charge was not immediately returned. An attorney for Chow, Curtis Briggs, said he was "completely underwhelmed" by the superseding indictment, which he said lacked new investigative findings or new accusations.

"It doesn't hold water, evidenced by the fact that they could have brought the racketeering charge in the first indictment," Briggs said. "We believe that he's innocent, we're still very optimistic about his case, and we look forward to the trial."

Yee was arrested along with 19 others in March during co-ordinated raids throughout the San Francisco Bay Area.

The arrests were the culmination of an FBI investigation started in 2006 after Chow left prison and was elected "dragonhead" of the Ghee Kung Tong. The FBI says undercover agents laundered $2.6 million in cash purportedly garnered through illegal bookmaking through the organization.

The Canadian Press


Most actively traded companies on the TSX, TSX Venture Exchange

Some of the most active companies traded Friday on the Toronto Stock Exchange and the TSX Venture Exchange:

Toronto Stock Exchange (15,445.04, up 60.59 points):

Chinook Energy Inc. (TSX:CKE). Oil and gas. Up 12 cents, or 5.43 per cent, to $2.33 on 16.7 million shares.

Talisman Energy Inc. (TSX:TLM). Oil and gas. Up four cents, or 0.34 per cent, to $11.80 on 7.2 million shares.

Romarco Minerals Inc. (TSX:R). Miner. Up four cents, or 4.60 per cent, to 91 cents on 4.7 million shares.

B2Gold Corp. (TSX:BTO). Miner. Up 17 cents, or 5.99 per cent, to $3.01 on 4.5 million shares.

Contrans Group Inc. (TSX:CSS). Transportation. Up 51 cents, or 3.46 per cent, to $15.25 on 4 million shares.

Bombardier Inc. (TSX:BBD.B). Aerospace. Down five cents, or 1.35 per cent, to $3.65 on 3.4 million shares

Toronto Venture Exchange (1,017.44, up 5.79 points):

Sunset Cove Mining Inc. (TSX:SSM). Miner. Unchanged at one cent on 5.7 million shares.

Cardiff Energy Corp. (TSX:CRS). Oil and gas. Down one cent, or 14.29 per cent, to six cents on 5 million shares.

Companies reporting major news:

TransForce Inc. (TSX:TFI). Transportation. Up $2.64, or 10.48 per cent, to $27.82 on 708,131 shares. Canada's largest trucking company, TransForce Inc., is set to become a national powerhouse in the specialized trucking business with a proposed friendly takeover of Ontario-based Contrans Group. Contrans provides bulk, tank, flatbed and other transportation services in Canada and parts of the United States.

The Canadian Press


Comic-Con attendees get first look at 'Mockingjay' trailer, 'Hunger Games' capitol experience

SAN DIEGO - The trailer for the next film in the popular "Hunger Games" series is making its premiere at Comic-Con.

Fans gathered Friday at the Capitol Gallery in downtown San Diego, where holographic versions of two characters from the film offered visitors a silent welcome before the minute-long teaser trailer was shown.

The trailer opens with a hovership landing and a meeting between leaders of the rebellion, where Phillip Seymour Hoffman and a grey-haired Julianne Moore discuss Katniss Everdeen's role. Meanwhile, President Snow (Donald Sutherland) declares the Mockingjay symbol illegal.

Katniss (Jennifer Lawrence) is shown entering the underground bunker where refugees of Panem are hiding, and she agrees to take up their cause.

Being the first to see the trailer for "The Hunger Games: Mockingjay Part I" was only part of the Capitol Gallery experience, which occupied a portion of the Hard Rock Hotel. In an all-white setting inspired by President Snow's Capitol colour scheme, visitors could enjoy treats from Peeta's bakery, witness colorful Capitol fashions, design souvenir T-shirts and have their photo taken with the holographic characters.

Even the trailer-viewing experience seemed designed by the Capitol: In an all-white room, fans were offered all-white candies and snacks before being shown into pod-like chairs, where they watched the trailer on personal Samsung tablets.

The trailer also can be seen on Samsung devices at Best Buy stores beginning Saturday before it's released widely next week.

The Canadian Press


25 years later, Loblaw still pushes going green to the price-savvy shopper

TORONTO - When Loblaw (TSX:L) decided to start selling environment-friendly products 25 years ago, the word green had barely evolved from being a colour description.

The grocery giant was the first major Canadian retailer to showcase a line of green-branded products and wasn't completely confident customers would be willing to pay more to save the planet.

Even the man spearheading the initiative, folksy pitchman Dave Nichol, wouldn't have considered himself a bona-fide tree-hugger.

"Dave used to ask me why I was wasting my bloody time... trying to save the bloody planet," said Paul Uys, who worked with Nichol — who died last year at age 73 — to launch President's Choice G.R.E.E.N in June 1989.

"But right from the get-go, he had believed that the market, therefore the consumer, was ready for a game change in terms of having the ability to make a difference."

Nathalie St-Pierre, with the Retail Council of Canada, said the appetite for eco-friendly products has grown in the last few decades, with consumers now demanding choices that can lessen their impact on the earth.

"Consumers are concerned," said St-Pierre, the group's vice-president for sustainability in Quebec. "They want to buy green."

Consumers are also taking on a more holistic view about what it means to be green. For instance, some consumers see buying local or organic food and items with less packaging as another way to help the planet.

"There's a large variety of perspectives on what is environmental or green or sustainable, and what it means," St-Pierre said. "It's more embedded with our thinking."

Even though consumers may still want to shop green, they also expect retailers to be able to provide products at comparable prices to competing non-green brands.

"They're being cautious and, so, when they decided to make the purchases, they will look at the price," said St-Pierre. "It's certainly a key factor. It's not because they don't care about the environment. They just have to make choices."

According to Statistics Canada, the proportion of households who say they purchased environmentally friendly cleaning products has been steadily increasing since 2007.

The latest available statistics showed that 85 per cent of respondents said they purchased these goods, an eight per cent increase from four years earlier. Eleven per cent say they always buy green products, compared with nine per cent in 2007.

Statistics Canada conducted the surveys with 15,000 to 21,000 respondents in 2007, 2009 and 2011.

Another study released last month by Nielsen, a global information and measurement company, found that 41 per cent of Canadians recently surveyed said they were willing to pay more for goods or services with a positive social or environmental impact. Forty-four per cent say they have made such a purchase in the past. The Nielsen study involved about 500 Canadian consumers between Feb. 17 to March 7.

Loblaw's pitchman Nichol, who died in September, may not have been a true environmentalist but he had an intuitive business sense, said Uys, who has since retired from the supermarket chain.

"History will say it was possibly en vogue rather than real intention, but there was a growing consumerism around reuse, reduce and recycle," Uys said.

Loblaw's eco-friendly product line of household products and foods started with about 100 items — ranging from non-bleached coffee filters to low-fat popcorn. The products, now branded as PC Green, PC Organics and PC Blue Menu items, still remain a large part of the grocer's offering today.

But ad agency executive Jack Bensimon believes that environmentalism for the sake of saving the planet may in fact be waning with consumers.

Instead, he thinks consumers are more likely now to make purchases that benefit themselves first and, if they also help the environment, then it's considered an added bonus.

"There is a slight retrenchment in altruism, solely for the sake of the planet," said Bensimon, the co-founder of Bensimon and Byrne, a Toronto agency that has commissioned previous reports on green consumerism. "Perhaps an offsetting trend is doing the right thing for yourself, which can help the planet in some instances."

In the end, consumers are making these choices based on money.

"The sense people have is that things are more expensive and they can afford less," said Bensimon. "In an environment where consumers are feeling tapped out, it's harder for them to make altruistic decisions on the basis of I'll pay extra to do the right thing for the planet."

Mary MacIsaac, Loblaw's senior director of brands, said consumers want to be able to go green without sacrificing quality or price.

"In the past, consumers were willing to trade off a little bit of performance for the environmentally agenda, but now, performance has to be there," she said. "They don't feel like they have to make the choice, they can have it all."

Follow @LindaNguyenTO on Twitter.

The Canadian Press


Orders for US durable goods up 0.7 per cent in June led by solid gain in business investment

WASHINGTON - Orders for long-lasting manufactured goods rebounded in June after a May decline, helped by a recovery in demand in a key category that signals business investment plans.

Orders for durable goods increased 0.7 per cent in June on a seasonally adjusted basis following a 1 per cent decline in May, the Commerce Department reported Friday.

A category viewed as a proxy for business investment plans rose a solid 1.4 per cent, recovering after a revised 1.2 per cent drop in May. It was the best showing since orders in this core capital goods category rose 4.7 per cent in March.

The strength last month came from solid gains in demand for commercial aircraft and machinery. Analysts expect economic activity will strengthen in the second half of the year, helped by stronger factory production.

The 0.7 per cent overall increase was in line with economists' expectations and pushed total orders to $239.9 billion. So far this year, orders are up 3.5 per cent over the same period last year.

Analysts were encouraged by the solid rebound in June, saying it should set the stage for further growth in coming months.

"June's strong orders data and other survey evidence suggest that business investment will continue to grow at a decent rate in the second half of the year," said Paul Dales, senior U.S. economist at Capital Economics. He said he expects growth would rebound to 3.2 per cent in the April-June quarter.

Demand for transportation products rose 0.6 per cent, reflecting a big 8.2 per cent gain in orders for commercial aircraft which offset a 2.1 per cent drop in demand for motor vehicles. The drop in auto demand was expected to be temporary given strong sales of new cars this year.

Orders for machinery rose 2.4 per cent while demand for primary metals such as steel increased 0.9 per cent.

Orders for computers and related products dropped 13.9 per cent but that followed a big 11.5 per cent increase in the previous month.

The overall economy went into reverse in the January-March quarter, with output shrinking at an annual rate of 2.9 per cent. That reflected in part a severe winter that disrupted U.S. economic activity, from factory production to shopping.

Many economists believe growth rebounded to a rate around 3 per cent in the April-June quarter and they are looking for momentum to build even more in the second half of this year.

The optimism is based on a belief that the five-year-old economic recovery is finally gaining traction, with businesses confident enough to step up hiring. That uptick in hiring is expected to power stronger consumer spending and more factory production.

The government reported that factory output increased for a fifth straight month in June as manufacturers cranked out more aircraft, chemicals and furniture. For the April-June quarter, manufacturing output accelerated to the fastest pace in more than two years and economists are looking for further gains in the months ahead, reflecting strong demand for autos and increased spending by businesses on new equipment.

A surprisingly resilient jobs report for June showed that factories added 16,000 positions, the most in four months, and the average work week for manufacturing employees remained at a post-recession high.

The Institute for Supply Management reported that its closely watched manufacturing index expanded in June for a 13th straight month with broad-based growth across nearly all of the 18 sectors that the index covers.

The Canadian Press




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