Canadian consumer prices and core retail sales miss forecasts

Fundamental Analysis

Key highlights of the week ended May 19

United Kingdom

On Monday, the British Prime Minister Theresa May, appointed after the country voted to leave the European Union on June 23, promised to extend British workers' rights in both workplace and boardroom. During her visit to the southern part of England, the UK PM said that the Conservative Party would protect workers of internet delivery firms and "gig" companies, such as Uber. Furthermore, May stated they intended to put employees on company boards. The Office for National Statistics reported on Tuesday that its CPI rose 2.7% on an annual basis in April, following the preceding month's gain of 2.3% and surpassing analysts' expectations for a 2.6% increase. British inflation is set accelerate further due the recent rebound in oil prices and the weak Sterling. The Office for National Statistics reported that wage growth, excluding bonuses, advanced 2.1% on an annual basis in the March quarter, the weakest gain since the three-month period to July 2016. The Office for National Statistics reported on Thursday that retail sales surged 2.3% in April, following the preceding month's upwardly revised fall of 1.4% and topping expectations for a 1.2% increase.

United States

Manufacturing activity in the New York state deteriorated unexpectedly in May, falling into the negative territory for the first time since October, official figures revealed. The regional Federal Reserve reported on Monday that its Empire State Manufacturing Index came in at –1.0 in the reported month, following the preceding month's 5.2 points. The Census Bureau reported on Tuesday that housing starts declined 2.6% to a seasonally adjusted annual pace of 1.17M units last month, following March's upwardly revised 1.28M-unit pace and falling behind expectations for a 3.7% rise to a 1.26M-unit pace. The Energy Information Administration reported US crude stockpiles fell 1.8M barrels in the week ending May 12, following the preceding week's drop of 5.2M barrels and falling behind expectations for a 2.5M-barrel decline. The US Department of Labour reported that initial jobless claims fell to 232K in the week ending May 12, following the preceding week's 236K and posting the third consecutive decline. In the meantime, analysts held expectations for an increase to 240K.

Canada

Statistics Canada reported on Wednesday that manufacturing sales rose 1.0% in March, following the preceding month's downwardly-revised fall of 0.6% and slightly missing analysts' expectations for a 1.1% gain. Statistics Canada reported that its CPI advanced 0.4% in April, following the preceding month's gain of 0.2% and falling behind expectations for an increase of 0.5%. Other data showed that retail sales climbed 0.7% in March, compared to the prior month's upwardly revised fall of 0.4% and surpassing expectations for a 0.4% increase. However, excluding volatile items, core retail sales fell 0.2%, whereas analysts anticipated a climb of 0.2% in the reported month after a 0.1% drop in February.

New Zealand

Statistics New Zealand reported that retail sales volumes climbed 1.5% on a seasonally adjusted basis in the three-month period to March, up from a 0.6% gain in the preceding period, whereas analysts anticipated a slighter increase of 1.1%. Dairy prices rose for the fifth consecutive time at the latest auction in New Zealand, pointing to a solid recovery. The Global Dairy Trade Price Index climbed 3.2% to an average selling price of $3,313 per tonne after rising 3.6% at the prior GDT auction. Later in the day, Statistics New Zealand reported that its Producer Price Index rose 0.8% in the March quarter, following the prior quarter's gain of 1.0% and topping analysts' expectations for a 0.7% increase.

CAD

"The fact that core (inflation) remains so muted is a fairly strong argument in favor of not following any lead by the Fed in the immediate future."

— Doug Porter, BMO Capital Markets

Canadian consumer prices rose less than expected last month, official figures showed on Friday. Statistics Canada reported that its CPI advanced 0.4% in April, following the preceding month's gain of 0.2% and falling behind expectations for an increase of 0.5%. Meanwhile, the so-called core inflation rate came in at 0.0% last month, compared to a 0.3% climb in March. On an annual basis, headline inflation rose 1.6%, unchanged from March's figure and missing forecasts for a 1.7% gain. Meanwhile, other measures of inflation, the Common CPI, the Median CPI and the Trimmed CPI came in at 1.3%, 1.6% and 1.3%, respectively, year-over-year in April. Prices were up in six out of the eight components, with gasoline prices posting the largest gain of 15.9% on an annual basis. Other data showed that retail sales climbed 0.7% in March, compared to the prior month's upwardly revised fall of 0.4% and surpassing expectations for a 0.4% increase. However, excluding volatile items, core retail sales fell 0.2%, whereas analysts anticipated a climb of 0.2% in the reported month after a 0.1% drop in February.

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