Weekly Economic Update

For the week of March 25 – 29.

It was a big day for data in Canada on Friday with releases for January retail sales and February consumer prices. Retail sales missed expectations significantly on a headline basis as growth fell by 0.3 percent on a month-over-month basis. Expectations were for growth of 0.4 percent. However, when removing auto sales from the calculation, sales growth actually met expectations of 0.1 percent. A more positive spin on the result was the fact that sales only fell in 4 of the 11 measured sub-sectors. The largest upside contributor was the supermarket sector, while the largest downside contributor was new car dealerships.

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February consumer prices beat expectations on both a month-over-month and year-over-year basis. Prices grew by 0.7 percent and 1.5 percent respectively, both beating their expected levels by 0.1 percent. Helping this month’s figures was an increase in gasoline prices (first monthly increase since July). A significant downward drag was seen from the service sector (-2.3 percent in February).

Releases this week in Canada will be highlighted by international merchandise and GDP numbers for January. In the United States we will see releases for housing starts, building permits, trade balance, annualized QoQ GDP for the 4th quarter and personal income/spending.

The Canadian dollar is currently trading relatively flat against the US dollar. Today’s expected range is 1.3382 – 1.3482.

Source: Bloomberg

Weekly Economic Update

For the week of March 18 – 22.

Important scheduled data releases for Canada this week include international securities transactions, wholesale trade sales, retail sales and consumer prices. January retail sales will be following a 0.1 percent drop from December, and consumer prices will follow January’s growth of 0.1 percent month-over-month. Releases like these will be followed closely by the Bank of Canada to help shape future decisions.

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Scheduled data releases for the United States this week include factory orders, durable goods orders, Markit US manufacturing PMI, existing home sales, and many others. A major focus this week will be the Federal Reserve’s policy meeting on Wednesday. Markets are pricing in a zero percent chance of an interest rate hike at this meeting.

Manufacturing sales in Canada grew by one percent on a month-over-month basis in January, more than twice the 0.4 percent growth predicted by economists. This release is a welcome one, as it ends a recent slide for the indicator (sales had dropped by a combined 2.9 percent in the last three months of 2018) and marks the largest jump in seven months. In terms of volumes, the measure actually grew by 1.4 percent for the same month. In terms of breadth, sales were up in 15 pf the 21 measured industries. The largest upside contributor was food manufacturing and the largest drag came from the aerospace category.

The Canadian dollar is currently trading up against the US dollar. Today’s expected range is 1.3273 – 1.3373.

Source: Bloomberg

Weekly Economic Update

For week of March 4 – 8, 2019

Canada December GDP fell 0.1 percent vs. consensus of flat growth, according to Statistic Canada. Output fell in seven of twenty industrial sectors, goods-producing sector fell 0.7 percent and service-producing sector rose 0.2 percent over the month of December. Largest upside contributor was agriculture, and largest downside was manufacturing. Canada GDP rose 0.4 percent in Q4 on an annualized basis, vs. estimate of 1 percent. Household consumption growth slows to 0.7 percent over the quarter (weakest since 2015), with investment and housing decline sharply and inventories accumulate. General government consumption climbed 2.0 percent, gross fixed capital formation declined 10.3 percent, inventory rose by $8 billion, and business gross fixed capital formation dropped 9.6 percent. Non-residential investment fell 10.9 percent (largest decline since 2016) and residential structures declined 14.7 percent (biggest decline since 2009). The weak GDP numbers sent the loonie tumbling on Friday, down almost a cent to as low as 1.3307 vs. USD.

U.S. January personal income fell 0.1 percent vs. estimate of 0.3 percent and December personal consumption fell 0.5 percent vs. consensus decline of 0.3 percent, according to a Commerce Department report. December PCE rose 0.1 percent and 1.7 percent over the month and year, respectively. The ISM index fell to 54.2 from 56.6 as four of the five main components (orders, employment, production, and deliveries) all saw decline. This gauge fell to a two-year low, slowing more than expected with a broad decline that suggests economic growth is moderating, although the drop may be related to weather disruption.

This week in Canada we will see data releases include build permits, housing starts, and unemployment rate. Bank of Canada rates decision will be on Wednesday, March 6. The currently implied probabilities of a rate hike are at 10.6 percent. The market expects the BoC to maintain a hiking bias, but less hawkish than in January, due to slow GDP growth and core inflation below 2 percent. Releases out of the United States this week include new home sales, trade balance, the release of U.S. Federal Reserve Beige book, housing starts, and unemployment rate.

Canada and US government yields are trading flat to 1.5bps lower with S&P futures higher (+8.0). The Canadian dollar is trading ~10bps lower against the US dollar this morning, today’s expected range is 1.3261 – 1.3361.

Source: Bloomberg

Weekly Economic Update

Retail sales for December in Canada were stronger than expected, but still dropped by 0.1 percent on a headline basis (expectations were for a drop of 0.3 percent). Excluding autos from the measure changes the results dramatically, bringing the sales growth down to -0.5 percent, weaker than the 0.3 percent drop expected. A large cause of the months drop is being blamed on the continuing fall of gasoline prices across the country. Overall, retail sales have been showing a weakening trend as higher borrowing costs and a weaker housing market are forcing consumers to hold onto their money.

Economic releases expected out of Canada this week will include consumer prices and an update on the January GDP picture for the country. As of today, economist expectation is for consumer prices to have increased by 0.2 percent and 1.5 percent on a month-over-month and year-over-year basis respectively for the month of January. In the United States we will see releases for wholesale inventories, housing starts, building permits, factory orders, annualized GDP and ISM manufacturing, among others.

Both US and Canada government yields are trading 1 to 2bps higher with S&P futures higher (+12.3). The Canadian dollar is trading flat against the US dollar this morning, today’s expected range is 1.3085 – 1.3185.

Source: Bloomberg

Weekly Economic Update

For the week of February 19 – 22.

A shortened week in Canada will come with a short list of data releases for the country. However, releases such as wholesale trade data and retail sales growth (both for December) could possibly have impact on the economy. Retail sales growth is expected to be flat at zero percent on a headline basis, and is expected to have dropped by 0.5 percent when removing the effect of auto sales. Scheduled data releases for the United States this week include durable goods, Markit US manufacturing, and existing home sales.

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As a result of the meetings in Beijing last week, Trade talks occurring between the United States and China will shift venues to the United States this week. Chinese President Xi Jinping, mirroring similar comments made by US President Donald Trump, noted “important progress” is being made in the discussions. Jinping further states he values the relationship held between Trump and himself, calling it a “good working relationship”.

Donald Trump signed the bipartisan bill to avoid another government shutdown in the United States, while also declaring a national emergency in order to secure funding for a border wall. It appears Trump will be both directing and redirecting approximately $8 billion dollars in order to build the wall.

The Canadian dollar is currently trading down against the US dollar. Today’s expected range is 1.3206 – 1.3306.

Source: Bloomberg

Weekly Economic Update

For the week of February 11 – 15.

January employment figures out of Canada blew expectations out of the water on Friday. The net change in employment was more than thirteen times what economists had expected, releasing at 66.8K. 30.9K were full-time positions, while the remaining were part-time positions. The unemployment rate ticked up to 5.8 percent from a previous reading of 5.6 percent. Hourly wage rate growth exceeded expectations by increasing to 1.8 percent, higher than December’s growth level of 1.5 percent.

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Housing starts data also released for the month of January in Canada on Friday. Starts were slightly higher than expectations at a level of 208.0K. Single detached housing starts were down by 10 percent, while multiple starts were up by approximately one percent. Housing starts in Ontario were up by approximately 6.8 percent.

Data released for Canada this week will include international merchandise trade, manufacturing sales and others. Releases out of the United States will include consumer prices, retail sales, empire manufacturing and others.

The Canadian dollar is currently trading flat against the US dollar. Today’s expected range is 1.3229 – 1.3329.

Source: Bloomberg

Weekly Economic Update

For the week of February 4 – 8. 

Nonfarm payrolls in the United States released at 304K for the month of January, nearly double surpassing expectations for the month. This is also a significant jump from the previous months revised reading of 222K (revised down sharply from 312K). Despite the beat on this headline posting, hourly earnings growth came in at 0.1 percent on a month-over-month, significantly shy of the expected 0.3 percent. The unemployment rate ticked slightly higher to 4.0 percent from the previous reading of 3.9 percent. As a result, the higher unemployment rate has been greatly impacted by the government shutdown in the United States.

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ISM manufacturing for January in the United States posted at 56.6, surpassing the expected 54.0, and pushing ahead of the previous month’s reading of 54.1. Prices paid dropped from 54.9 to 49.6, while new orders jumped to 58.2 from 51.1. Based on January’s data, the manufacturing industry appears to be unaffected by the ongoing trade war between the United States and China.

The Canadian dollar is currently trading relatively flat against the US dollar this morning. Today’s expected range is 1.3053 – 1.3153.

Source: Bloomberg

Weekly Economic Update

For the week of January 28 – February 1.

It was a slow end for data last week with no releases out of Canada on Friday. United States experienced a postponement of releases due to government shutdown of durable goods and new home sales. The lack of data left investors little to digest outside of trade, global events, and government shutdown discussion.

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The only notable release for Canada this week is GDP. November GDP figures for the country are expected to be released on Thursday following a previous growth posting of 0.3 percent on a month-over-month basis and 2.2 percent on a year-over-year basis, which will give markets something to look forward to.

Expected data releases in the United States this week include postings for wholesale inventories, ADP employment, annualized GDP, personal spending and income, nonfarm payrolls, ISM manufacturing and construction spending. Depending on the status of the government shutdown in the United States, we could see more or less than the anticipated amount. In addition to these releases, the Fed will be holding a policy decision meeting on Wednesday where the expected decision will be “no change”.

The Canadian dollar is currently trading down against the US dollar. Today’s expected range is 1.3185 – 1.3285.

Source: Bloomberg

Weekly Economic Update

For the week of January 21 – 25.

Consumer prices in Canada beat expectations for the month of December, with growth coming in at -0.1 percent on a month-over-month basis instead of the -0.4 percent growth hat was expected by economists. On a year-over-year basis, growth levels jumped to 2.0 percent from 1.7 percent a month prior. Expectations were for this growth level to remain at 1.7 percent in December. A great deal of the December’s strength stemmed from an increase in airfares (up 22 percent). Despite a stronger posting on a headline basis, many are seeing the underlying details are not strong enough to drastically sway the Bank of Canada’s hand.

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It will be a quiet day for data today in both Canada and the United States. Data releases in Canada this week include the weekly update on Bloomberg Nanos Confidence, wholesale trade sales, manufacturing sales and retail sales (all for the month of November). Data releases in the United States include releases for existing home sales, wholesale inventories, durable goods orders and new home sales.

The Canadian dollar is currently trading down against the US dollar. Today’s expected range is 1.3242 – 1.3342.

Source: Bloomberg