Economic Data Roundup: Canada

It’s time for another edition of my Economic Data Roundup, forex fellas! Let’s gather ’round to take a look at the latest reports from Canada and figure out what’s next for the Loonie.

Consumer spending

Canada’s June retail sales report printed stronger than expected results, with the headline figure showing a 1.1% gain versus the estimated 0.3% uptick and the core version indicating a 1.5% increase versus the projected 0.4% rise. To top it off, the previous month’s figures were upgraded to show a 0.3% increase in headline retail sales and a 0.9% gain in core retail sales.

In fact, retail sales figures have been coming in stronger than expected since April and has been rising for six consecutive months already. If you’re wondering why this is a big deal, then you should remember that retail sales is a primary gauge of consumer spending, which accounts for a huge chunk of overall economic activity. Aside from that, consistent domestic demand usually spells positive prospects for manufacturing and employment.

Manufacturing

Speaking of manufacturing, factory sales have marked a 0.6% gain in June as expected, following the stronger than expected 1.7% surge back in May. This was enough to erase the 0.2% drop in manufacturing sales for April. Meanwhile, the Ivey PMI also marked a rebound in July as it landed at 54.1 and indicated industry expansion after a couple of months of contraction.

Although manufacturing figures haven’t been as impressive as Canada’s retail sales data, it’s worth noting that the sector has also been showing gains in five out of the last six months. Plus, the fact that Canada’s trade balance has returned to the positive territory in May at 0.6 billion CAD and followed it up with an even larger trade surplus of 1.9 billion CAD in June reflects a rosier outlook for the manufacturing sector.

Employment

If you keep track of economic releases regularly, then you probably remember Canada releasing a bleak July jobs report a few weeks back. Soon after though, Statistics Canada announced that there was an error in the jobs report then made a considerable upward revision from 0.2K to 41.7K!

Despite the upgrade, the report still shows that most of the gains were spurred by part-time hiring and that the “improvement” in the jobless rate from 7.1% to 7.0% was caused by a falling participation rate. It looks like the labor market is still trailing far behind!

Inflation

As for inflation, Canada’s latest CPI figures also turned out to be disappointing. The headline CPI showed a 0.2% decline in price levels for July while the core version of the report indicated a 0.1% dip. On an annualized basis, the CPI is at 2.1% in July versus the 2.4% figure for the previous month. This marks the first decline in inflation in nearly a year!

How all this will impact overall economic performance remains to be seen though, as Canada is set to print its monthly GDP report tomorrow. After chalking up a 0.4% expansion in May, the economy is expected to show a 0.3% growth figure for June. Analysts predict that this could be enough to show a 2.5% quarterly GDP reading for the second quarter of this year, which could allow the Loonie to pile on its recent gains.