TD/ Canada Trust Economic Highlights – May 27


United States

  • Global equities had a solid week as lackluster economic data suggested continued central bank accom­modation. Bond markets traded sideways as soft data was offset by oil prices.
  • Manufacturing PMIs painted a mixed picture of global activity. Chinese industry continued to contract in May, while Japanese and European indexes showed improvement. U.S. preliminary May PMI pulled back slightly but suggests healthy growth still.
  • U.S. housing data was mixed, with housing starts rebounding strongly while existing home sales decreased in April. Still, jobless claims and CPI data suggested the economy is making headway.
  • The Fed is unlikely to see enough robust data by mid-June to raise rates then. We suspect that by mid- September, they will.


  • There were few surprises this week, as Governor Poloz reiterated his view that Q1 is likely to have marked a low point for the Canadian economy, with growth expected to recover through the remainder of the year.
  • This week’s data confirmed that GDP is likely to have started the year effectively unchanged. While retail sales recovered in March, on a quarterly basis they remain below their 2014Q4 level.
  • Headline inflation softened in April, driven by lower energy prices. In contrast, core inflation remains close to, but slightly above, the Bank of Canada’s 2% medium-term target.
  • Looking ahead, we expect that the Bank of Canada will keep the policy rate unchanged at 0.75% on Wednesday morning’s monetary policy announcement.

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