Weekly Economic Update

For the week of June 18 – 22.

Foreigners bought a net $9.13 billion of Canadian securities in April compared to $6.40 billion in March. $8.79 billion were bonds, and $2.41 billion were Canadian stocks and investment shares. Foreigners divested $2.07 billion of Canadian money market paper, while Canadians sold $0.65 billion of foreign securities in April.

Canadian manufacturing sales unexpectedly declined by 1.3 percent month-over-month to $56.2 billion in April after increasing 1.4 percent in March. Excluding autos, sales decreased to 1.7 percent, while motor vehicle manufacturing increased to 3.5 percent.  The partial maintenance shutdowns at Canadian refineries were one of the main contributing factors of the decline. 10 out of the 21 industries decreased in sales. On a year-over-year basis, manufacturing sales were up 3.6 percent.

Canadian existing home sales declined 0.1 percent month-over-month, versus expectations of 1.7 percent. Existing home sales in Toronto increased by 1.6 percent month-over-month, but decreased in Vancouver by 0.2 percent month-over-month. The average home price in Canada rose 0.9 percent month-over-month to $476,424.

Data releases in Canada this week include retail sales and CPI. Data releases in the US this week include housing figures, sentiment gauges, and manufacturing indices.

Canada and US government yields are trading 1 to 2bps lower with S&P futures lower (-19.1). WTI crude oil is currently trading at $65.04 per barrel. The Canadian dollar is currently trading at 1.3183 against the US dollar. Today’s expected range is 1.3133 – 1.3233.

Source: Bloomberg

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Weekly Economic Update

For the week of June 11 – 15.

Canadian housing starts in May came in lower than expected at 195.6k, versus  expectations of 220k, making it the slowest pace in over a year. The decline was due to multiple starts, which fell 15 percent month-over-month to 125k in May from 147.5k in April. Single detached housing starts rose 2 percent month-over-month to 70.7k from 69.3k. Both Ontario and Quebec experienced large monthly declines in starts; Ontario falling 21.6 percent to 52.4k, and Quebec falling 33.4 percent to 35.5k.

The Canadian economy unexpectedly lost 7.5k jobs in May, while consensus expectations were for a 23.5k gain. Full-time employment fell by 31k in May, while part-time employment offset some of the full time losses with a 23.6k increase. 8.3k manufacturing jobs and 13k construction jobs were lost, while 21.5k jobs were added in the service industry. Comparably, the unemployment rate remained at a record low of 5.8 percent, and the hourly wage gains came in at 3.9 percent year-over-year, breaking the fastest pace since 2009.

Data releases in Canada this week include housing, international securities transactions, and manufacturing sales. Data releases in US this week include CPI, retail sales, various manufacturing figures, and the University of Michigan’s Sentiment gauge. The FOMC will also announce its rate decision on Wednesday, with the consensus expectations for the Fed to bump short term rates up by 25 bps.

The Canadian dollar is under pressure this morning, losing ground against all major currencies on concerns regarding the US targeting the auto sector. Today’s expected trading range is 1.2974 – 1.3074.

Source: Bloomberg

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Weekly Economic Update

For the week of June 4 – 8.

The US economy added 223k jobs in May, exceeding expectations of 190k. Construction jobs increased by 25k, manufacturing increased by 18k, and service providers increased by 171k. Auto and parts makers and temporary help services experienced a decrease in jobs. Average hourly earnings increased 2.7 percent from the prior year, exceeding expectations of 2.6 percent. The number of people employed increased by 293k, and the number of people unemployed decreased by 281k. As a result, the unemployment rate dropped to 3.8 percent from 3.9 percent. The unemployment rate has never been this low since April 2000.

Markit Canada Manufacturing PMI’s in May increased to 56.2 from April’s 55.5, making it the highest reading since April 2011. The new orders component rose to 57.6 from 55.7 in April, marking a twentieth straight month of expansion. However, the employment component decreased to the lowest reading since December 2017. Meanwhile, the US PMI fell slightly in May to 56.4 from April’s 56.5. New orders in May decreased to 58 from April’s 58.8.

ISM Manufacturing in May exceeded expectations, coming in at 58.7 versus the expected 58.2. The new orders component rose to 63.7 from 61.2, while the order backlogs index increased to 63.5, making it the highest reading since 2004. The employment gauge also had its first increase in three months to 56.3 from 54.2. 16 out of the 18 manufacturing industries reported growth in May. No industry had a decrease in employment.

Data releases in Canada this week include international merchandise trade, building permits, housing starts, and the May employment report. Major scheduled releases south of the border include various manufacturing figures, the trade balance, and wholesale inventories.

The Canadian dollar is trading a bit higher from Friday’s market close. Today’s expected trading range is 1.2865 – 1.2965.

Source: Bloomberg

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Weekly Economic Update

For the Week of May 28 – June 1

US durable goods orders declined more than expected in April, falling 1.7 percent versus consensus expectations of a 1.3 percent decline. The decline was concentrated in transportation. Excluding transportation, orders were up 0.9 percent and the increase was fairly broad-based, spanning computers, electrical equipment and metals; however orders for machinery fell another 0.8 percent following a 3.2 percent drop the month prior. Analysts believe that durable goods orders may be reaching a plateau with the level of activity leveling out.

The final print of the University of Michigan Sentiment gauge for May was a bit lower than expectations with a reading of 98.0 versus expectations of 98.8. The latest reading marks a four-month low as consumers wade through less favourable buying conditions for homes and big-ticket items. The current conditions gauge, which measures American’s perceptions of their finances, fell to 111.8 from 114.9 in April. However, the expectations measure improved to a three-month high at 89.1 from April’s 88.4.

There are two main releases for Canada this week – GDP figures and the Bank of Canada’s rate decision. Consensus expectations are for first quarter GDP to have accelerated to a 2.0 percent annualized pace from 1.7 percent in the fourth quarter of last year. Meanwhile, the Bank of Canada is scheduled to announce its rate decision on Wednesday. Consensus is that the Bank will hold rates steady at 1.25 percent. A few manufacturing releases are also scheduled this week. In the US, GDP figures will also be released along with the employment report, various housing numbers and ISM manufacturing.

The Canadian dollar is trading flat to slightly down from Friday’s market close. Today’s expected trading range is 1.2936 – 1.3036.

Source: Bloomberg

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Weekly Economic Update

For the week of May 22 – 25.

Canadian retail sales in March overall increased more than consensus expectations, rising 0.6 percent to $50.2 billion. The largest contributor to the retail sales jump was the new car dealers category, adding 0.74 percentage points. Excluding autos, sales actually declined by 0.2 percent. The largest downside contributor to retail sales was the gas stations category, subtracting 0.20 percentage points. E-commerce sales also jumped to $1.27 billion, rising 11.1 percent from a year earlier and represents 2.6 percent of total retail sales.

Canadian headline inflation came in as expected on a month-over-month basis at 0.3 percent in April. The year-over-year basis fell short of the 2.3 percent expected increase, sitting at 2.2 percent. Meanwhile, two of the three core measures increased, while the ‘common’ component remained steady at 1.9 percent. The average core components are currently at 2.03 percent, up from March’s 1.97 percent revised average.

The slight miss on year-over-year inflation had traders moving the loonie down by over 0.5 percent on Friday, but the loonie has bounced back since late yesterday. Today’s expected trading range is 1.2717 – 1.2817.

Scheduled economic releases this week for Canada are limited to wholesale trade sales, and Bloomberg Nanos Confidence. Scheduled economic releases this week for US include various manufacturing data, new and existing home sales, the FOMC meeting minutes for the May 2nd meeting, and the final May print of the University of Michigan’s sentiment gauge.

Source: Bloomberg

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