HIGHLIGHTS OF THE WEEK – June 9
This week’s data provided plenty of evidence that U.S. economic growth is back on track after a disappointing start of the year. Activity improved in both manufacturing and non-manufacturing sectors in May, new vehicle sales surged to 16.7M, but most importantly the labor market churned out 217k new jobs.
Besides the economic data, markets were also treated to an historic policy announcement by the European Central Bank (ECB), which moved ahead with the myriad of monetary policy measures aimed at encouraging lending, nudging down the euro and rekindling inflation and economic growth.
The news out of Europe, in combination with positive economic data, buoyed U.S. equity markets and led to a modest sell-off in Treasuries.
The Canadian economy added a lacklustre 26,000 jobs in May, recovering almost all the jobs lost in April. Looking through the monthly volatility, the economy has generated only modest growth in employment (+0.5% y/y) over the last year. The unemployment rate, which inched up to 7.0% in May, has been stuck in a 6.9% to 7.2% range since October 2012.
At the same time, Canada’s international merchandise trade balance slipped back into a deficit position ($638 million) in April after recording surpluses in both February ($813 million) and March ($766 million).
Along with still-benign core inflation, these releases support the Bank of Canada’s decision this week to leave its short term interest rate unchanged at 1.00%. The dovish tone of the BOC statement helped to lead the dollar lower against most major currencies.
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