Week in review
Canada – Housing starts fell 3.7% to 192.4K in August (from 200K in the prior month). There were lower starts in both rural (-3.4%) and urban areas (-3.8%). The decline in urban starts was split between singles (-3.3%) and multis (-4%). On a regional basis in urban areas, declines in Ontario (-25.9%), Atlantic Canada (-31.3%), and Quebec (-1.6%) more than offset increases in BC (+31%) and the Prairies ( +14%).
The Teranet–National Bank House Price Index rose 0.8% in August thanks to gains in 10 of the 11 metropolitan regions covered (Montreal was the only city seeing a price drop in the month). On a year-on-year basis, home prices were up 5% nationally, but with contrasting fortunes across cities. Calgary led the pack with a 7.9% year-on-year increase, followed by Hamilton and Toronto (both at +6.7%), Vancouver (+6.1%), Edmonton (+4.5%), Victoria (+2.1%), Winnipeg (+1.9%), Ottawa-Gatineau (+1.2%), Montreal (+1.1%), and Halifax (+0.9%). However, Quebec City remained in deflation mode (- 0.1%).
Building permits expanded 11.8% in dollar terms in July. The soaring permits were driven by residential permits (+43.4% for multis offsetting a 0.5% drop for singles). There was also a 5.2% increase in the value of non-residential permits. In real terms, residential permits jumped 21.4% as a 35.2% increase for multis offset a 0.6% drop for singles.
Canada's capacity utilization rate rose six ticks to a 7-year high of 82.7% in the 2014Q2 (from a downwardly revised 82.1% in Q1). There was a further ramp up in the oil & gas sector where the utilization rate is 88%, the highest in eleven years. Manufacturing capacity utilization rose to 82%, a twoyear high, although some sub-sectors are even closer to capacity, e.g. transportation equipment where the utilization rate is now 93.7%, the highest on records. Those, coupled with solid corporate profits, bode well for business investment spending later this year.
United States – Retail sales jumped 0.6% in August after an upwardly revised 0.3% gain in the prior month (from the flat print reported originally). August sales were supported by motor vehicles/parts (+1.5%). Excluding autos, sales were up 0.3%, after an upwardly revised +0.3% print in the prior month (from +0.1%). Ex-auto sales were supported by gains for sellers of food/beverage, health/personal care products, building materials, clothing, sporting goods, electronics and furniture, which more than offset declines in sales of gasoline and general merchandise.
The National Federation of independent business index (NFIB) rose to 96.1 in August (from the prior month’s print of 95.7), the second highest since 2007. Businesses were a bit more optimistic about the economy, although the index remained negative.
Weekly jobless claims data for the week of September 6th showed initial claims rising to 315K, from an upwardly revised 304K. The more reliable 4-week moving average rose slightly to 304K. Continuing claims for the prior week rose 9K to 2.487 million.
The preliminary estimate for September’s Michigan consumer sentiment index is 84.6 (an increase from the prior month’s print of 82.5), the highest since July last year. Consumers felt more confident about the economic outlook (sub-index rising to 75.6) but were slightly less upbeat about current conditions (sub-index falling to 98.5).
World – China’s trade surplus rose to roughly US$50 bn in August. Exports were up 9.4%, while imports were down 2.4%, both on a year-on-year basis. Still in August, the annual inflation rate fell to 2%. Aggregate financing rose by almost 1 trillion yuan in August, with new loans accounting for the bulk of the financing (702.5 bn yuan). The eurozone’s industrial production rose 1% in July, erasing the prior month’s decline. In Japan, industrial production rose 0.2% in July, after a sharp decline in the prior month.
This presentation may contain certain forward-looking statements about the 2009 Economic and Financial Outlook. Such statements are subject to risk and uncertainties. Actual results may differ materially due to a variety of factors, including legislative or regulatory developments, competition, technological change and economic conditions in Canada, North America or internationally. These and other factors should be considered carefully and readers should not rely unduly on National Bank of Canada’s forward-looking statements. This presentation may not be reproduced in whole or in part, or further distributed or published or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express consent of National Bank.
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