HIGHLIGHTS OF THE WEEK – June 16
Data revisions and results of the Quarterly Services Survey point to a first quarter contraction that’s more direct than previously thought, with current tracking pointing to a 2% decline in economic activity in Q1.
Slower momentum in services expenditures and weaker retail sales data also put a damper on Q2
expectations. Despite this, a reading in the mid-3% range is expected.
The economy should continue to expand at a pace of around 3% in the second half of the year, with improving job growth and an acceleration in wages supportive of robust consumption gains.
Both the Bank of Canada and OECD highlighted stretched home prices and elevated household debt as a key vulnerability to the Canadian economy in two separate reports.
Housing data released this week pointed to a moderation in housing activity. The Teranet Home Price
Index showed a deceleration in annual home price growth to 5.1% y/y in May, from 5.5% in the prior month. Meanwhile, on a trend basis, housing starts have averaged 184,000 units over the last year, a pace that is consistent with underlying economic fundamentals.
The Wynne government took a majority in Ontario’s election this week, bringing political stability to the province. Even with this victory out of the way, the Government still has some major challenges ahead. Today’s manufacturing data were yet another reminder Ontario is still facing international competitive
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