TD/Canada Trust Economic Highlights – July 28


           United States

  • Concerns over the rapid rise in inflation in recent months eased somewhat this week. Core CPI surprised markets by decelerating to 1.9% year-over-year from 2% last month. Meanwhile, headline inflation came in as expected at 2.1%.

  • Data on the housing market was a mixed bag. On Tuesday, existing home sales came in above consensus, rising 2.6% month-over-month. However, on Thursday, new home sales fell 8.1% M/M, and last month’s gain of 18.6% was revised downwards to 8.3%, meaning that little progress over the past two months has been made.

  • News overseas was positive, with upside surprises in Chinese manufacturing and Eurozone economic activity. The U.K. economy also posted growth of 3.2% QoQ annualized in the second quarter. Improve­ment in America’s trading partners is certainly welcome following the large drag exerted by net exports on the economy in Q1.


  • With the May retail trade reading on Wednesday, the last major data release before the monthly GDP print next Thursday, a clearer picture is beginning to form of an economy that is firing on all cylinders in the second quarter (with the possible exception of government), as consumers and investors rev up their engines.

  • Specifically, solid real retail sales so far in the quarter (+1.0% in April and +0.4% in May) are supporting the view that real consumption growth will come in around 5% (annualized) in the second quarter of 2014.

  • Combined with an expected robust performance from investment, offset by a modest drag from trade and inventories, we’re now projecting real GDP growth of around 2.5% in Q2 with some upside risk.

For further information, please contact:

John Maveety Manager, Residential Mortgages – Greater Ottawa Area TD Canada Trust
T: (613) 371-1984 F: (888) 899-1984 P: (866) 767-5446