TD/ Canada Trust Economic Highlights – May 19


United States

• The data flow show an increasingly dismal picture of first quarter real GDP growth. From an original estimate of +0.2%, we expect the second to show a contraction of close to 1.0% (annualized).
• Economic data have diverged between labor market indicators (that show strength) and others (that show weakness). Case in point: retail sales were flat in April, but weekly jobless claims fell to an all time low.• There are two possible explanations for the divergence. Either productivity has slowed and will show up in reduced profit margins and wage growth (or both), or economic activity is being underestimated. The latter possibility should not be discounted entirely – “residual seasonality” may be distorting estimates ofeconomic growth, activity may be shifting to less-reported service sectors, and falling prices may explain weakness in nominal series.


• Canadian existing home sales increased 2.3% (M/M) in April and now sit 10% above year-ago levels. Average resale prices rose 9.5% Y/Y, accelerating for a third consecutive month.
• Canadian manufacturing sales increased 2.9% in March, after declining a cumulative 5.2% over the
January-February period. The March increase reflected a 13.5% surge in the transportation equipment
• The Canadian dollar held relatively steady this week at 83 US cents as the WTI price of oil held firm at
US$59 per barrel. Bond yields also took a breather from the increases recorded in recent weeks.

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