the bank of canada causes a surprise · growth drivers. the sub-indexes tied to inventories showed...

WEEKLY NEWSLETTER

François Dupuis, Vice-President and Chief Economist • Mathieu D’Anjou, Senior Economist Benoit P. Durocher, Senior Economist • Francis Généreux, Senior Economist • Jimmy Jean, Senior Economist • Hendrix Vachon, Senior Economist

Desjardins, Economic Studies: 514-281-2336 or 1 866-866-7000, ext. 5552336 • [email protected] • desjardins.com/economics

NOTE TO READERS: The letters k, M and B are used in texts and tables to refer to thousands, millions and billions respectively.IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. The data on prices or margins are provided for information purposes and may be modified at any time, based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. The opinions and forecasts contained herein are, unless otherwise indicated, those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group. Copyright © 2017, Desjardins Group. All rights reserved.

HIGHLIGHTS

f United States: Hurricane Harvey causes jobless claims to explode.

f The Bank of Canada orders another key rate increase.

f Canada: A ninth straight increase for job growth.

f Canada: The trade balance improved slightly in July.

A LOOK AHEAD

f Energy prices should trigger an increase in the U.S. consumer price index.

f Will the hurricanes rattle U.S. household confidence?

f Modest upticks expected for industrial output and retail sales, but Hurricane Harvey is adding to the uncertainty.

f Canada: Housing starts could slip in August.

FINANCIAL MARKETS

f Hurricanes and geopolitical tensions bear down on stock markets.

f New monetary tightening in Canada drives short-term rates higher.

f The Canadian dollar approaches US$0.83.

The Bank of Canada Causes a Surprise

ECONOMIC STUDIES | SEPTEMBER 8, 2017

CONTENTSKey Statistics of the Week ................................. 2

United States, Canada

Financial Markets ............................................... 3

A Look Ahead ................................................... 4United States, Canada, Overseas

Economic Indicators of the Week ...................... 6

TablesEconomic indicators ......................................... 8Major financial indicators ...............................10

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http://desjardins.com/economics

ECONOMIC STUDIES

2SEPTEMBER 8, 2017 | WEEKLY NEWSLETTER

UNITED STATES

f New weekly jobless claims shot up considerably for the week ending September 2, rising from 236,000 to 298,000, the highest level since February 2015—an increase due to Hurricane Harvey in Texas. Hurricane Katrina had caused a temporary increase of about 100,000 claims in 2005. This spike could possibly continue in the next few weeks, especially if Hurricane Irma packs an equal punch.

f The ISM non-manufacturing index moved from 53.9 to 55.3 in August—still below the average for the first six months of 2017. Six of the ten sub-indexes posted growth. Employment, new orders and exports were the main growth drivers. The sub-indexes tied to inventories showed considerable declines.

f The U.S. trade balance of goods and services deteriorated very slightly in July. It moved from -US$43.5B in March to -US$43.7B. This commercial trade deficit is not as sharp as the flash data on the trade in goods published a week earlier had suggested. Exports of goods and services declined 0.3%, while imports contracted by 0.2%. If no major reversal occurs in the coming months, net exports could make a modest contribution to real GDP growth in Q3 2017.

Francis Généreux, Senior economist

CANADA

f Whereas most forecasters and investors expected the Bank of Canada to maintain the status quo on key rates, this second straight key rate increase announced by the monetary authorities caused some surprise. Canada’s sharp economic growth since the start of the year with a real GDP’s cumulative annualized performance of 4.1% clearly weighed heavily in the balance. Key rate increases are certainly not over. That said, the exact timing of the next hike is not easy to predict. This depends largely on Canada’s economic growth, level of inflation and the loonie’s value in the next few months.

f The labour market increased by 22,200 new jobs in August. Since the start of 2017, 219,100 workers have joined the Canadian economy. The unemployment rate declined from 6.3% to 6.2%, a low point not seen since October 2008. The unemployment rate continued to fall below the equilibrium level estimated at 6.47% for 2017 by the Organisation for Economic Co-operation and Development (OECD), confirming that the labour market is in excellent health. What’s more, this type of situation could potentially give rise to some upside pressure on inflation, in theory.

f As expected, the value of merchandise exports declined by 4.9% in July. That said, imports also deteriorated (-6.0%), a surprising result considering the vitality of domestic demand. As such, the trade balance improved slightly for the month, rising from -$3.76B to -$3.04B.

Benoit P. Durocher, Senior economist

CANADA Employment uptrend is still fairly strong

Sources: Statistics Canada and Desjardins, Economic Studies

Monthly change in employment

In thousands

-40

-20

0

20

40

60

2015 2016 2017

Employment 6-month moving average

Key Statistics of the Week

UNITED STATES Hurricane Harvey drives up jobless claims

Sources: U.S. Department of Labor and Desjardins, Economic Studies

Initial jobless claims

In thousands

200250300350400450500550600650700

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Hurricane Katrina and other hurricanes

Hurricane Sandy

Hurricane Harvey


ECONOMIC STUDIES

14,900

14,950

15,000

15,050

15,100

15,150

15,200

15,250

15,300

2,420

2,430

2,440

2,450

2,460

2,470

2,480

2,490

2017/07/27 2017/08/04 2017/08/14 2017/08/22 2017/08/30 2017/09/07

S&P 500 (left) S&P/TSX (right)

GRAPH 1 Stock markets

Sources: Datastream and Desjardins, Economic Studies

Index Index

1.8

1.9

2.0

2.1

2.2

2.3

2.4

-0.4

-0.3

-0.2

-0.1

0.0

2017/07/27 2017/08/04 2017/08/14 2017/08/22 2017/08/30 2017/09/07

Spread (left) United States (right) Canada (right)

GRAPH 2 Bond markets

10-year yield

In % points In %


GRAPH 3 Currency markets

US$/C$ US$/€


1.16

1.17

1.18

1.19

1.20

1.21

0.78

0.79

0.80

0.81

0.82

0.83

2017/07/27 2017/08/04 2017/08/14 2017/08/22 2017/08/30 2017/09/07

Canadian dollar (left) Euro (right)

Financial MarketsAhead of Expectations, the Bank of Canada Raises Rates Again

The return from the Labour Day holiday was a difficult one for stock markets, as further military posturing by North Korea over the long weekend continued to cast a shadow. The S&P 500 posted a 0.7% drop during Tuesday trading. Wednesday and Thursday brought greater stability, but Friday saw a further drop with hurricane Irma approaching the Florida coast. The S&P 500 financials sector came under pressure as it headed towards a weekly drop of 3.6%, as insurance company stocks took a beating from the natural disasters affecting the United States. On the Canadian side, the S&P/TSX took a hit in each trading session. While losses were widespread across all sectors, the financial sector was most affected, posting a weekly drop of 2.6%.

The most notable development in the bond markets was the decision by the Bank of Canada (BoC) to raise its key rates on Wednesday; most forecasters had expected this decision would not be made until its October meeting. The 2- and 5-year yields saw spectacular increases, and spreads between Canadian and U.S. yields went into positive territory at these maturities. The trend was further consolidated on Friday by slightly higher-than-expected job creation. After the data was published, investors anticipated a more than 40% probability that a third consecutive increase would be announced at the October meeting.

The Canadian dollar had another good week. Because of the decision by the BoC and heightened expectations of monetary tightening, the loonie is now exceeding US$0.820 (C$1.219/$US). An oil price increase to almost US$49 a barrel also helped the currency, along with the general weakness of the greenback. The U.S. dollar continues to be held back by doubts surrounding the outlook for monetary tightening in the United States. The European Central Bank has made known its unease with the euro’s recent appreciation. This has forced it to lower its inflation forecasts for 2018 and 2019. The common currency has yet to be shaken by these revelations and is currently trading at over US$1.20.

Jimmy Jean, CFA, Senior economist

Hendrix Vachon, Senior economist

ECONOMIC STUDIES


A Look Ahead

UNITED STATES

Consumer price index (August) – After dropping in June and stagnating in July, the consumer price index (CPI) is expected to rise significantly in August. The increase will largely be due to energy prices. The price of gasoline at the pumps rose 3.9% on average across the country. However, given that fuel prices tend to drop in August, seasonal adjustments will only exacerbate the increase (the impact of Hurricane Harvey on gas prices and inflation will be felt even more in September). Excluding food and energy, the index is expected to rise 0.2% after a 0.1% increase over four consecutive months. A sharper increase in housing prices, among other things, is anticipated. The total CPI is expected to rise by 0.4%. The annual change is expected to increase from 1.7% to 2.0%. Core inflation should remain stable at 1.7%.

Retail sales (August) – The 0.6% rise in retail sales in July was the highest monthly change so far in 2017. However, sales are expected to slow down in August. First of all, sales of new motor vehicles have declined considerably during the month, a situation that may be linked to Hurricane Harvey’s striking Texas. The drop in motor vehicle sales will partially offset the projected rise in service station sales following the increase in gasoline prices. An increase of 0.4% is anticipated in sales excluding autos and gas. As for total sales, an increase of 0.3% is expected. Nonetheless, the hurricane hitting at the very end of the month may lead to some surprises in terms of retail sales results.

Industrial production (August) – Industrial production rose 0.2% in July, but this obscures the drop of 0.1% in manufacturing output. It should see an increase in August, as indicated by the jump in the number of hours worked in this sector (the highest increase since March 2013). The continuing stability of the ISM manufacturing index is also a good sign. Therefore, an increase of 0.8% in manufacturing output is expected. However, mining is expected to stagnate and energy production to drop. Industrial production overall should increase by 0.4%. The industrial capacity utilization rate is expected to rise from 76.7% to 77.0%. However, Hurricane Harvey’s impact on Texas may have caused fairly significant disruptions in output late in the month that will be reflected in the national numbers. In September 2005, Hurricane Katrina caused a 1.8% drop in industrial production.

University of Michigan consumer confidence index (September – preliminary) – In August, the University of Michigan confidence index saw its greatest increase so far this year. The 3.4-point gain almost offset the total drop of 3.7 points recorded during the two previous months. Several signs point toward another improvement in confidence in September. For example, the TIPP index rose during the month, and the increase in the Conference Board index in August is also a good sign. However, this does not take into account the effects of Hurricane Harvey, and possibly Hurricane Irma. Since Harvey, gasoline prices have risen significantly, as have new jobless claims. The weekly household confidence indexes compiled by Bloomberg and by Gallup have noticeably declined over the last week. Therefore, a drop in the University of Michigan index from 96.8 to 95.0 is expected. However, the threat of a more significant change remains very high.

CANADA

Housing starts (August) – At 222,280 units, the number of housing starts was very high in July. However, some slowing may become evident over the next few months because of the combined effect of the slight rise in interest rates and the restrictive measures introduced in the Toronto area. The decrease may be felt most keenly in the multi-unit housing market in urban areas, as it reached very high levels over the last few months.

FRIDAY Sept. 15 - 8:30August m/m Consensus 0.1% Desjardins 0.3%July 0.6%

FRIDAY Sept. 15 - 9:15August m/m Consensus 0.1% Desjardins 0.4%July 0.2%

FRIDAY Sept. 15 - 10:00September Consensus 95.2 Desjardins 95.0August 96.8

MONDAY Sept. 11 - 8:15August ann. rate Consensus 216,000 Desjardins 210,000July 222,300

THURSDAY Sept. 14 - 8:30August m/m Consensus 0.3% Desjardins 0.4%July 0.1%


ECONOMIC STUDIES

OVERSEAS

Euro zone: Industrial production (July) – From March to May, Euroland industrial production saw strong growth, which culminated in a monthly gain of 1.2% in May. Nonetheless, a retreat of 0.6% was felt in June. The level of the ISM indexes suggests that growth may rapidly return. However, German industrial production experienced disappointing stagnation in July after dropping 1.1% in June, even as the consensus expected an increase of 0.5%. The 0.5% increase in French industrial production is nevertheless more encouraging. Among the data coming from the euro zone, the Euroland trade balance for July will be published Friday.

United Kingdom: Bank of England meeting (September) – The Bank of England (BoE) is expected to maintain the status quo. Even if certain economic indicators have recently sent more positive signals, the basic trend remains moderate and cloaked in significant uncertainty. The BoE is still expected to indicate that it will take a wait-and-see attitude with respect to inflation, provided the economy continues to follow this moderate trend and that inflation projections remain firmly focused on the target. Included in the economic indicators to be published are the price indexes for the month of August. After a sharp rise caused by the depreciation of the pound, inflation seems to have plateaued for now. Retail sales for August will be released Thursday. Despite a leap in July, they appear to have weakened somewhat.

WEDNESDAY Sept. 13 - 5:00July m/m Consensus 0.1%June -0.6%

THURSDAY Sept. 14 - 7:00September Consensus 0.25% Desjardins 0.25%August 3 0.25%

ECONOMIC STUDIES


Economic IndicatorsWeek of September 11 to 15, 2017

Note: Desjardins, Economic Studies are involved every week in the Bloomberg survey for Canada and the United States. Approximately 15 economists are consulted for the Canadian survey and a hundred or so for the United States. Theabbreviations m/m, q/q and y/y correspond to monthly, quarterly and yearly variation respectively. Following the quarter, the abbreviations f, s and t correspond to first estimate, second estimate and third estimate respectively. The times shown are Daylight Saving Time (GMT - 4 hours). Forecast of Desjardins, Economic Studies of the Desjardins Group.

CANADA

Previous data Day Hour Indicator Period Consensus

UNITED STATESMONDAY 11 --- ---

TUESDAY 12 --- ---

WEDNESDAY 13 8:30 Producer price index Total (m/m) Aug. 0.3% 0.5% -0.1% Excluding food and energy (m/m) Aug. 0.2% 0.2% -0.1% 14:00 Federal budget (US$B) Aug. -124.0 n/a -42.9

THURSDAY 14 8:30 Initial unemployment claims Sept. 4-8 300,000 325,000 298,000 8:30 Consumer price index Total (m/m) Aug. 0.3% 0.4% 0.1% Excluding food and energy (m/m) Aug. 0.2% 0.2% 0.1% Total (y/y) Aug. 1.8% 2.0% 1.7% Excluding food and energy (y/y) Aug. 1.6% 1.7% 1.7%

FRIDAY 15 8:30 Empire manufacturing index Sept. 18.0 17.0 25.2 8:30 Retail sales Total (m/m) Aug. 0.1% 0.3% 0.6% Excluding automobiles (m/m) Aug. 0.5% 0.7% 0.5% 9:15 Industrial production (m/m) Aug. 0.1% 0.4% 0.2% 9:15 Production capacity utilization rates Aug. 76.8% 77.0% 76.7% 10:00 Michigan’s consumer sentiment index – preliminary Sept. 95.2 95.0 96.8 10:00 Business inventories (m/m) July 0.2% 0.2% 0.5%

MONDAY 11 8:15 Housing starts (ann. rate) Aug. 216,000 210,000 222,300

TUESDAY 12 --- ---

WEDNESDAY 13 --- ---

THURSDAY 14 8:30 New housing price index (m/m) July n/a 0.3% 0.2%

FRIDAY 15 9:00 Existing home sales Aug.


ECONOMIC STUDIES

Economic IndicatorsWeek of September 11 to 15, 2017

Note: In contrast to the situation in Canada and the United States, disclosure of overseas economic fi gures is much more approximate. The day of publication is therefore shown for information purposes only. The abbreviations m/m, q/q and y/y correspond to monthly, quarterly and yearly variation respectively. The times shown are Daylight Saving Time (GMT - 4 hours).

Previous data m/m (q/q) y/y Country Hour Indicator Period

OVERSEAS

Consensus m/m (q/q) y/y

SUNDAY 10Japan 19:50 Machinery orders July 4.1% -7.8% -1.9% -5.2%

MONDAY 11Japan 0:30 Tertiary industry activity index July 0.1% 0.0% Italy 4:00 Industrial production July -0.5% 3.6% 1.1% 5.3%

TUESDAY 12United Kingdom 4:30 Consumer price index Aug. 0.5% 2.8% -0.1% 2.6%United Kingdom 4:30 Producer price index Aug. 0.1% 3.1% 0.1% 3.2%Japan 19:50 Producer price index Aug. 0.1% 3.0% 0.3% 2.6%

WEDNESDAY 13Germany 2:00 Consumerpriceindex–final Aug. 0.1% 1.8% 0.1% 1.8%United Kingdom 4:30 ILO unemployment rate July 4.4% 4.4% Euro zone 5:00 Industrial production July 0.1% 3.3% -0.6% 2.6%Euro zone 5:00 Net change in employment Q2 n/a n/a 0,4 % 1.5%China 22:00 Industrial production Aug. 6.6% 6.4%China 22:00 Retail sales Aug. 10.5% 10.4%

THURSDAY 14Japan 0:30 Industrialproduction–final July n/a n/a -0.8% 4.7%France 2:45 Consumerpriceindex–final Aug. 0.5% 0.9% 0.5% 0.9%Switzerland 3:30 Swiss National Bank meeting Sept. -0.75% -0.75% United Kingdom 4:30 Retail sales Aug. 0.2% 1.2% 0.3% 1.3%United Kingdom 7:00 Bank of England meeting Sept. 0.25% 0.25%

FRIDAY 15Euro zone 5:00 Trade balance (€B) July 20.3 22.3 Russia 6:30 Bank of Russia meeting Sept. 8.50% 9.00%

ECONOMIC STUDIES


REF. MONTH LEVEL

-1 month -3 months -6 months -1 year

Leading indicator (2010 = 100) July 128.3 0.3 1.3 2.3 3.9

ISM manufacturing index1 Aug. 58.8 56.3 54.9 57.7 49.4

ISM non-manufacturing index1 Aug.* 55.3 53.9 56.9 57.6 51.7

Cons. confidence Conference Board (1985 = 100)1 Aug. 122.9 120.0 117.6 116.1 101.8Personal consumption expenditure (2009 $B) July 11,909 0.2 0.7 1.5 2.7Disposable personal income (2009 $B) July 12,823 0.2 0.6 1.5 1.3Consumer credit ($B) June 3,856 0.3 1.1 2.4 5.7Retail sales ($M) July 478,873 0.6 0.9 1.1 4.2

Excluding automobiles ($M) July 378,797 0.5 0.3 1.0 3.8Industrial production (2007 = 100) July 105.5 0.2 0.5 2.0 2.2

Production capacity utilization rate (%)1 July 76.7 76.7 76.5 75.7 75.9New machinery orders ($M) July* 466,360 -3.3 -0.5 1.1 4.9New durable good orders ($M) July 228,922 -6.8 -0.9 2.0 4.0Business inventories ($B) June 1,869 0.5 0.6 1.4 2.8

Housing starts (k)1 July 1,155 1,213 1,154 1,236 1,223

Building permits (k)1 July 1,230 1,275 1,228 1,300 1,175

New home sales (k)1 July 571.0 630.0 590.0 599.0 627.0

Existing home sales (k)1 July 5,440 5,510 5,560 5,690 5,330

Commercial surplus ($M)1 July* -43,689 -43,543 -47,375 -48,775 -41,294

Nonfarm employment (k)2 Aug. 146,730 156.0 555.0 957 2,097

Unemployment rate (%)1 Aug. 4.4 4.3 4.3 4.7 4.9Consumer price (1982–1984 = 100) July 244.0 0.1 0.0 0.0 1.7

Excluding food and energy July 251.9 0.1 0.3 0.5 1.7Personal cons. expenditure deflator (2009 = 100) July 112.4 0.1 0.1 0.2 1.4

Excluding food and energy July 113.1 0.1 0.3 0.5 1.4Producer price (2009 = 100) July 112.7 -0.1 0.0 0.6 2.0Export prices (2000 = 100) July 122.1 0.4 -0.2 0.4 0.8Import prices (2000 = 100) July 122.6 0.1 -0.2 0.2 1.5

1 Statistic shows the level of the month of the column; 2 Statistic shows the variation since the reference month; * New statistic in comparison with last week.

UNITED STATESMonthly economic indicators

VARIATION (%)

UNITED STATESQuarterly economic indicators

REF. QUART. LEVEL

Quart. ann. 1 year 2016 2015 2014

Gross domestic product (2009 $B) 2017 Q2 17,030 3.0 2.2 1.5 2.9 2.6Consumption (2009 $B) 2017 Q2 11,854 3.3 2.7 2.7 3.6 2.9Government spending (2009 $B) 2017 Q2 2,894 -0.3 -0.1 0.8 1.4 -0.6Residential investment (2009 $B) 2017 Q2 595.4 -6.5 1.5 5.5 10.2 3.5Non-residential investment (2009 $B) 2017 Q2 2,302 6.9 4.4 -0.6 2.3 6.9

Business inventory change (2009 $B)1 2017 Q2 1.8 --- --- 33.4 100.6 67.8Exports (2009 $B) 2017 Q2 2,182 3.7 3.3 -0.3 0.4 4.3Imports (2009 $B) 2017 Q2 2,796 1.6 4.1 1.3 5.0 4.5Final domestic demand (2009 $B) 2017 Q2 17,621 2.7 2.4 2.1 3.3 2.7GDP deflator (2009 = 100) 2017 Q2 113.0 1.0 1.6 1.3 1.1 1.8Labor productivity (2009 = 100) 2017 Q2 108.1 1.5 1.3 0.0 1.2 1.0Unit labor cost (2009 = 100) 2017 Q2 108.8 0.2 -0.2 1.1 1.8 1.9Employment cost index (Dec. 2005 = 100) 2017 Q2 129.7 2.2 2.4 2.2 2.1 2.0

Current account balance ($B)1 2017 Q1 -116.8 --- --- -451.7 -434.6 -373.8

VARIATION (%) ANNUAL VARIATION (%)

1 Statistics representing the level during the period; * New statistic in comparison with last week.


ECONOMIC STUDIES

REF. MONTH LEVEL

-1 month -3 months -6 months -1 year

Gross domestic product (2007 $M) June 1,739,752 0.3 1.2 2.3 4.3Industrial production (2007 $M) June 375,194 0.0 2.8 4.4 9.9Manufacturing sales ($M) June 53,938 -1.8 0.2 0.6 6.2

Housing starts (k)1 July 222.3 212.9 213.4 208.1 195.7Building permits ($M) July* 7,922 -3.5 11.5 3.7 12.4Retail sales ($M) June 48,992 0.1 1.4 4.4 7.3

Excluding automobiles ($M) June 36,116 0.7 1.9 4.6 6.6Wholesale trade sales ($M) June 61,433 -0.5 1.5 5.0 8.8

Commercial surplus ($M)1 July* -3,040 -3,764 -1,028 126.6 -2,176Exports ($M) July* 44,139 -4.9 -7.0 -5.3 2.2Imports ($M) July* 47,179 -6.0 -2.8 1.6 4.0

Employment (k)2 Aug.* 18,444 22.2 26.1 25.9 31.2

Unemployment rate (%)1 Aug.* 6.2 6.3 6.6 6.6 7.0Average weekly earnings ($) June 973.5 0.3 0.6 0.3 1.8

Number of salaried employees (k)2 June 16,262 79.7 44.2 27.7 23.4Consumer price (2002 = 100) July 130.4 0.0 0.0 0.7 1.2

Excluding food and energy July 125.6 0.0 0.3 1.0 1.5Excluding 8 volatile items July 129.7 -0.1 0.1 0.8 0.9

Industrial product price (2002 = 100) July 111.8 -1.5 -2.5 -1.0 1.3Raw materials price (2002 = 100) July 95.6 -0.6 -5.8 -4.4 4.5Money supply M1+ ($M) July 944,352 0.0 1.9 4.2 10.0

1 Statistic shows the level of the month of the column; 2 Statistic shows the variation since the reference month; * New statistic in comparison with last week.

CANADAMonthly economic indicators

VARIATION (%)

REF. QUART. LEVEL

Quart. ann. 1 year 2016 2015 2014

Gross domestic product (2007 $M) 2017 Q2 1,849,280 4.5 3.7 1.5 0.9 2.6Household consumption (2007 $M) 2017 Q2 1,061,240 4.6 3.8 2.4 1.9 2.8Government consumption (2007 $M) 2017 Q2 353,717 2.5 0.8 2.0 1.5 0.8Residential investment (2007 $M) 2017 Q2 127,850 -4.7 1.9 3.0 3.8 2.7Non-residential investment (2007 $M) 2017 Q2 167,940 7.1 1.0 -8.6 -11.5 3.2

Business inventory change (2007 $M)1 2017 Q2 11,072 --- --- -415.0 3,861 9,392Exports (2007 $M) 2017 Q2 598,305 9.6 5.2 1.0 3.4 5.8Imports (2007 $M) 2017 Q2 593,879 7.4 3.5 -0.9 0.3 2.2Final domestic demand (2007 $M) 2017 Q2 1,823,927 3.5 2.6 1.0 0.3 1.9GDP deflator (2007 = 100) 2017 Q2 115.0 -1.4 2.5 0.6 -0.8 1.9Labour productivity (2007 = 100) 2017 Q2* 109.5 -0.3 2.9 0.7 -0.5 2.6Unit labour cost (2007 = 100) 2017 Q2* 114.6 -3.1 -1.6 0.8 2.2 0.9

Current account balance ($M)1 2017 Q2 -16,319 --- --- -66,968 -67,553 -48,207

Production capacity utilization rate (%)1 2017 Q2* 85.0 --- --- 80.6 80.8 82.4Disposable personal income ($M) 2017 Q2 1,213,848 6.8 5.3 3.7 4.4 3.2Corporate net operating surplus (2007 $M) 2017 Q2 263,764 -7.5 38.5 -4.5 -19.5 8.2

1 Statistics representing the level during the period; * New statistic in comparison with last week.

CANADAQuarterly economic indicators

VARIATION (%) ANNUAL VARIATION (%)

ECONOMIC STUDIES


ACTUAL

Sep. 8 Sep. 1 -1 month -3 months -6 months -1 year Higher Average Lower

United StatesFederal funds – target 1.25 1.25 1.25 1.00 0.75 0.50 1.25 0.87 0.50Treasury bill – 3 months 1.04 1.00 1.01 0.99 0.73 0.34 1.16 0.69 0.18Treasury bonds – 2 years 1.28 1.34 1.29 1.34 1.35 0.79 1.41 1.18 0.74Treasury bonds – 5 years 1.65 1.74 1.74 1.76 2.10 1.22 2.13 1.76 1.11Treasury bonds – 10 years 2.07 2.16 2.19 2.20 2.58 1.67 2.61 2.24 1.56Treasury bonds – 30 years 2.69 2.77 2.78 2.85 3.16 2.39 3.19 2.87 2.27S&P 500 index (level) 2,465 2,477 2,441 2,432 2,373 2,128 2,481 2,323 2,085DJIA index (level) 21,823 21,988 21,858 21,272 20,903 18,085 22,118 20,302 17,888Gold price (US$/ounce) 1,347 1,322 1,287 1,266 1,200 1,334 1,347 1,244 1,127CRB index (level) 181.97 180.95 179.61 176.77 182.65 182.54 195.14 184.39 166.50WTI oil (US$/barrel) 48.21 47.32 48.81 45.82 48.05 45.88 54.48 48.99 42.48

CanadaOvernight – target 1.00 0.75 0.75 0.50 0.50 0.50 1.00 0.54 0.50Treasury bill – 3 months 0.96 0.80 0.71 0.52 0.49 0.50 0.96 0.55 0.42Treasury bonds – 2 years 1.51 1.34 1.21 0.74 0.84 0.58 1.51 0.82 0.49Treasury bonds – 5 years 1.71 1.59 1.47 0.96 1.27 0.71 1.71 1.11 0.57Treasury bonds – 10 years 1.98 1.92 1.85 1.42 1.81 1.15 2.06 1.60 0.95Treasury bonds – 30 years 2.35 2.30 2.29 2.04 2.48 1.77 2.53 2.19 1.63

Spread with the U.S. rate (% points)Overnight – target -0.25 -0.50 -0.50 -0.50 -0.25 0.00 0.00 -0.32 -0.75Treasury bill – 3 months -0.08 -0.20 -0.30 -0.47 -0.24 0.16 0.35 -0.15 -0.54Treasury bonds – 2 years 0.23 0.00 -0.08 -0.60 -0.51 -0.21 0.23 -0.36 -0.63Treasury bonds – 5 years 0.06 -0.15 -0.27 -0.80 -0.83 -0.51 0.06 -0.65 -0.89Treasury bonds – 10 years -0.09 -0.24 -0.34 -0.77 -0.76 -0.52 -0.09 -0.64 -0.84Treasury bonds – 30 years -0.34 -0.46 -0.49 -0.82 -0.68 -0.62 -0.34 -0.69 -0.88

S&P/TSX index (level) 14,996 15,192 15,033 15,473 15,507 14,540 15,922 15,239 14,349Exchange rate (C$/US$) 1.2130 1.2396 1.2683 1.3470 1.3471 1.3048 1.3749 1.3176 0.8244Exchange rate (C$/€) 1.4596 1.4700 1.4992 1.5080 1.4376 1.4656 1.5210 1.4514 1.3828

OverseasEuro zoneECB – Refinancing rate 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Exchange rate (US$/€) 1.2033 1.1859 1.1821 1.1196 1.0672 1.1233 1.2033 1.1011 1.0387

United KingdomBoE – Base rate 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25Bonds – 10 years 1.00 1.11 1.11 0.94 1.16 0.87 1.51 1.16 0.68FTSE index (level) 7,373 7,439 7,310 7,527 7,343 6,777 7,548 7,213 6,666Exchange rate (US$/£) 1.3198 1.2951 1.3012 1.2745 1.2172 1.3267 1.3338 1.2654 1.2049

GermanyBonds – 10 years 0.32 0.38 0.31 0.27 0.49 -0.05 0.57 0.26 -0.22DAX index (level) 12,299 12,143 12,014 12,816 11,963 10,573 12,889 11,752 10,259

JapanBoJ – Overnight rate -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10Nikkei index (level) 19,275 19,691 19,730 20,013 19,605 16,966 20,230 18,945 16,252Exchange rate (US$/¥) 107.76 110.27 109.19 110.35 114.75 102.70 118.18 110.75 100.32

CRB: Commodity Research Bureau; WTI: West Texas Intermediate; ECB: European Central Bank; BoE: Bank of England; BoJ: Bank of JapanNote: Data taken at markets closing, with the exeption of the current day where they were taken at 11:00 a.m.

UNITED STATES, CANADA, OVERSEASMajor financial indicators

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