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Weekly Economic Letter

United States: Make way for recovery

Tue, Aug 11 2009, 05:38 GMT
by Economic and Strategy Team

National Bank of Canada  |  View company's profile


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Summary

  • For all intents and purposes, the inventory correction seems to be over among retailers and for the economy on the whole. The ratio of private-sector inventories to final sales in real terms continues to slide and has now reached a level no longer congruent with recession but rather with recovery.

  • The ratio of new orders to inventories has now attained a level historically associated with the start of recovery. In fact, such a surge in new orders as at present has always translated into an increase in manufacturing production in the same quarter.

  • The recent data concerning the manufacturing sector are corroborated by a recovery in demand in the economy. Investment in machinery and equipment, motor vehicle sales and housing statistics continue to improve as well.

  • Looking back, the recession south of the border will have been deep but focused essentially on the goods sector, sparing the service sector for the most part.

  • We have good reason to believe that employment is set to return into positive territory with the imminent resurgence of production. Contrary to all previous recessions since 1960, the cyclical component of productivity growth this time was boosted upward during the downturn rather than after it.

  • We must also bear in mind that the economy is already in recovery in the third quarter without the budget stimulus effects having kicked in yet. Food for thought.

Published on  Tue, Aug 11 2009, 05:42 GMT


National Bank of Canada http://www.nbc.ca/ | info@nbc.ca

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Legal disclaimer and risk disclosure

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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