Highlights This Month

Transcription

1 November 2018 CANADIAN GDP UP 0.1% IN AUGUST ON OIL SANDS PRODUCTION REBOUND THE HURT FROM RED OCTOBER US ECONOMY CONTINUES TO LEAD THE PACK CANADA S ECONOMY KEEPS UP ITS GROWTH STREAK CANADA S HOUSING MARKET STAYS SOFT IN OCTOBER

2 Volume 42, Number 11 November 2018 RBC ECONOMICS RESEARCH Craig Wright SENIOR VICE PRESIDENT & CHIEF ECONOMIST Dawn Desjardins VICE PRESIDENT & DEPUTY CHIEF ECONOMIST Paul Ferley ASSISTANT CHIEF ECONOMIST MACROECONOMICS Robert Hogue SENIOR ECONOMIST REGIONAL ECONOMIES Nathan Janzen SENIOR ECONOMIST MACROECONOMICS Josh Nye SENIOR ECONOMIST FINANCIAL MARKETS & MACROE- CONOMICS Joseph Allegritti RESEARCH ASSOCIATE Rannella Billy-Ochieng ECONOMIST Ramya Muthukumaran ECONOMIST Andrew Agopsowicz SENIOR ECONOMIST IN BRIEF Highlights This Month 2 CANADIAN GDP UP 0.1% IN AUGUST ON OIL SANDS PRODUCTION REBOUND Details were softer than the increase would imply, with a jump in oil sands production and utilities output not likely to be repeated. 6 THE HURT FROM RED OCTOBER Concerns about rising protectionism and slowing global growth saw equity markets drop in October. 7 US ECONOMY CONTINUES TO LEAD THE PACK A strong consumer backdrop and ongoing fiscal stimulus has helped the US economy accelerate in CANADA S ECONOMY KEEPS UP ITS GROWTH STREAK Canada s economy extended its growth streak to seven months, but the increase in August was narrowly based. 13 CANADA S HOUSING MARKET STAYS SOFT IN OCTOBER Already-soft home resales edged down further by 1.6% from September and new listings fell 1.1% across Canada. EDITOR Adrianna Pineda rbceconomicsresearch@rbc.com SUBSCRIPTION INFORMATION rbceconomicsresearch@rbc.com ECONOSCOPE is published and produced monthly by RBC Economics Research. Address all correspondence to the Editor, RBC Economics Research, RBC, 9th Floor, South Tower, 200 Bay Street, Toronto, Ontario, M5J 2J5. Royal Bank of Canada. The material contained in Econoscope is the property of Royal Bank of Canada and may not be reproduced in any way, in whole or in part, without express authorization of the copyright holder in writing. The statements and statistics contained herein have been prepared by RBC Economics Research based on information obtained from sources considered to be reliable. Royal Bank of Canada makes no representation or warranty, express or implied, with respect to its accuracy or completeness. This publication is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities. Econoscope is indexed in the Canadian Business Index available online in the Canadian Business & Current Affairs Database. Registered trade-mark of Royal Bank of Canada Printed on recycled and recyclable paper.

3 CURRENT TRENDS Paul Ferley, Nathan Janzen, Josh Nye CANADA GDP UP 0.1% IN AUGUST ON OIL SANDS PRODUCTION REBOUND LATEST AVAILABLE: AUGUST RELEASE DATE: OCTOBER 31, 2018 Details were softer than the (slightly) stronger-than-expected 0.1% headline GDP increase would imply. A 3.2% jump in oil sands production won t likely be repeated to the same extent the gain retraced a similar sized drop the prior month due to transitory production disruptions. Similarly, warm weather boosted utilities output for a second straight month. That will reverse as temperatures return to normal. Activity outside of those components was little changed. Manufacturing, retail, and wholesale sales all dipped lower, broadly in line with earlier-released monthly sales reports for the sectors with other services components posting trend-like increases on balance. HIGHLIGHTS Canadian GDP rose a stronger-than -expected 0.1% in August as oil sand production rebounded. Employment rose 11k in October as a jump in full-time employment was partially offset by lower part-time employment. Retail sales rose 0.2% in September with gains in 6 of 11 subsectors. Canadian housing starts back above 200k in October. The Canadian trade balance posted a $0.4 billion deficit in September down from a revised $0.6 billion deficit in August. CPI inflation ticked up to 2.4% in October from 2.2% in September. Real GDP % change, month-over-month Source: Statistics Canada

4 CANADA S JOBS DATA TELL A FAMILIAR STORY: HEALTHY LABOUR MARKET, DISAP- POINTING WAGE GROWTH LATEST AVAILABLE: OCTOBER RELEASE DATE: NOVEMBER 2, 2018 Employment rose 11k in October as a jump in full-time employment was partially offset by lower part-time employment. Year-to-date job gains have all been full-time. Job growth was driven by the services sector, particularly business, building and support services and wholesale and retail trade. The unemployment rate returned to a cycle low of 5.8%. The decline was partly due to labour force participation, though the participation rate for year-olds rose to a record high. Wage growth for permanent employees slowed to 1.9% from as high as 3.9% earlier this year. Unemployment rate % of labour force Source: Statistics Canada CANADIAN RETAIL SALES UP 0.2% IN SEP- TEMBER LATEST AVAILABLE: SEPTEMBER RELEASE DATE: NOVEMBER 23, 2018 Retail sales rose 0.2% in September with gains in 6 of 11 subsectors. Excluding price effects, retail volumes were up a slightly stronger 0.5% following three consecutive monthly declines. For Q3 as a whole, sales volumes were up an annualized 1.5%. That is well below last year s 5.7% pace which was the best since Retail sales % change, month-over-month Source: Statistics Canada

5 CANADIAN HOUSING STARTS BACK ABOVE 200K IN OCTOBER LATEST AVAILABLE: OCTOBER RELEASE DATE: NOVEMBER 8, 2018 Some bounce-back in new building activity was to be expected. Three straight monthly declines from an outsized recent peak of 247k in June had left housing starts tracking below the pace of new building permit issuance. Indeed, the 206k starts in October is still below the 225k per-month of new permits issued over the three months ending in September the latest month available suggesting there could yet be stronger building activity in the pipeline. Housing starts Thousands Source: Canadian Mortgage and Housing Corporation CANADA POSTED $0.4 BILLION TRADE DEFICIT IN SEPTEMBER LATEST AVAILABLE: SEPTEMBER RELEASE DATE: NOVEMBER 2, 2018 The Canadian trade balance posted a $0.4 billion deficit in September down from a revised $0.6 billion deficit in August (previously reported as a $0.5 billion surplus). Exports and import volumes both declined although non -energy export volumes were still up 4% from a year ago. Equipment imports dipped in September but were still up solidly in Q3 as a whole. Merchandise trade C$ billions, annualized Exports Imports Source: Statistics Canada

6 CANADIAN CPI UP TO 2.4% IN OCTOBER LATEST AVAILABLE: OCTOBER RELEASE DATE: NOVEMBER 23, 2018 CPI inflation ticked up to 2.4% in October from 2.2% in September. A 4.6% m/m increases in airfares likely reflecting more methodology/sample changes earlier this year more than underlying price trends accounted for part of the headline gain. The Bank of Canada s three preferred core measures (the trim, median, and common CPI) ticked up on average to 2.0% from 1.9% in September. They have been close to 2% for most of the year. Consumer price index % change, year-over-year Source: Statistics Canada % change from: ECONOMY AT A GLANCE Lastest Previous month month Year ago Real GDP Aug Industrial production Aug Employment Oct Unemployment rate* Oct Manufacturing Production Aug Employment Oct Shipments Sep New orders Sep Inventories Sep Retail sales Sep Car sales Sep Housing starts (000s)* Oct Exports Sep Imports Sep Trade balance ($billlions)* Sep Consumer prices Oct * Levels are shown for the latest period and the same period a year earlier. Source: Statistics Canada, RBC Economics Research

7 FINANCIAL MARKETS THE HURT FROM RED OCTOBER Josh Nye Concerns about rising protectionism and slowing global growth saw equity markets drop in October. The S&P 500 plunged nearly The S&P 500 plunged nearly 7%, its worst monthly per7%, its worst monthly perforformance in seven years. Other global benchmarks saw mance in seven years. Other similar declines, with the MSCI World index down 7.4% in global benchmarks saw similar declines, with the MSCI World October. index down 7.4% in October. Volatility resurfaced with the VIX (volatility index) spiking, though not to the extent seen in the selloff earlier this year. Equities peaked in early October just as the IMF released their latest economic projections. They marked down their global growth forecasts for this year and next amid increasing trade barriers and tightening financial conditions that are seen weighing on emerging markets in particular. Concerns about global growth were also evident in the commodities space with oil prices falling to six-month lows. That s one reason the Canadian dollar hasn t seen much of a boost from the USMCA trade deal. While the risk-off move saw some intermittent fixed income rallies, Treasury and GoC yields ultimately ended the month higher. That s even as lower oil prices weighed on breakeven inflation rates. A push higher in real yields comes as the Fed and Bank of Canada show no sign of slowing down their tightening cycles. The BoC is now indicating rates need to rise to a neutral level, while some Fed officials have indicated monetary policy will eventually need to become restrictive. That contrasts with Europe, where the ECB isn t likely to raise rates until later next year while the BoE remains handcuffed by Brexit uncertainty. Monetary policy divergence between the US and some of its trading partners saw the greenback gain 2% in October, hitting its highest level in more than a year. Stress on emerging markets from a higher US dollar and rising interest rates was one of the IMF s key concerns in their October outlook.

8 FINANCIAL MARKETS US ECONOMY CONTINUES TO LEAD THE PACK Josh Nye HIGHLIGHTS The US economy has picked up this year while its G7 partners are seeing more moderate growth. A strong consumer backdrop and ongoing fiscal stimulus should keep the US economy growing at a solid pace next year. The midterm elections featured few surprises and didn t change our economic projections. The Fed s November meeting was a non-event but December s should see another rate hike. The US economy has been the exception to slower growth across the G7 this year. Canadian GDP growth has moderated from last year s impressive 3% pace, activity in Japan has softened, and Europe has been hit by both transitory factors and political uncertainty. But fiscal stimulus has helped the US economy accelerate in 2018, even as higher interest rates and capacity constraints would typically see growth leveling off at this point in the cycle. US GDP was up an annualized 3.5% in Q3, building on a 4.2% gain in Q2 to deliver the best back-toback growth in four years. Consumer spending led the way as a strong job market, rising wages, and near-record confidence have Americans opening up their pocketbooks. The public sector also provided support, with federal government spending running at its fastest year-over-year pace since It wasn t all positive business investment was softer than expected after strong gains earlier this year. And net trade was a sizeable drag in Q3, more than retracing the previous quarter s add when purchasers likely tried to get ahead of rising import tariffs. But those factors only served to partially offset robust consumer and government spending. The question is, how long will this strength be sustained? In the near-term the economy looks set to maintain an above-trend pace of growth. The household savings rate is healthy and wages are picking up, suggesting continued momentum on the consumer side. Rising protectionism and higher interest rates present headwinds to business investment, but sentiment remains strong and financial conditions are still broadly accommodative. We doubt Q3 s soft business investment is the start of a trend. And while much of the boost from government stimulus will occur this year, the fiscal impulse will remain positive in The trade outlook is less rosy protectionist measures have failed to rein in the trade deficit and relative strength in the domestic economy points to imports outpacing exports again next year. On balance, we look for GDP growth to moderate slightly to 2.5% in 2019 from 2.9% this year still well above potential growth of around 2%. MIDTERM ELECTIONS LIMIT PROSPECTS FOR FURTHER TAX CUTS US Treasuries sold off throughout September and in early October with 10-year yields hitting a seven-year high of more than 3.20%. Real yields are rising while implied inflation expectations remain at or below highs seen earlier this year. The US economy s persistent strength seems to have investors thinking the current cycle has plenty of legs. That sentiment was expressed by Fed Chair Powell, who recently said, there s no reason to think that this cycle can t continue for quite some time. His comment that rates might eventually rise above neutral lev-

9 els a view we ve expressed for some time, but that markets have been slow to price in also contributed to the selloff. Even the usually dovish head of the Chicago Fed recently advocated for rates to eventually rise to a slightly restrictive setting. The rise in longer-term yields wasn t matched at the short end. So the curve-flattening trend seen throughout this year that has cause so much consternation among market watchers has stalled. We don t see the yield curve inverting over the next year. The combination of investors pricing in more significant Fed tightening, inflation expectations creeping higher, and plenty of supply to fund government deficits should keep upward pressure on longer-term yields. We see US 10-year yields ending this year at 3.30% and continuing to rise throughout NO SURPRISES IN LATEST FED ANNOUNCEMENT November s FOMC meeting was very straightforward no rate hike and only minor tweaks to the policy statement. Risks to the outlook remain balanced, and further, gradual rate increases are expected. That guidance has become synonymous with hikes at every other meeting, a pattern we expect will continue with a move in December and four more rate increases next year. Markets are pricing in less tightening through the end of next year, even relative to the Fed s dot plot median of three hikes in We see little reason for policymakers to slow the tightening cycle, even as fed funds gets closer to most estimates of the neutral rate. With unemployment at its lowest in nearly 50 years and the economy still carrying decent momentum, we think inflation risks are tilted to the upside. U.S. real GDP Quarter-over-quarter, annualized % change 6 4 Forecast U.S. Target Rate % 7 6 Forecast Source: Bureau of Economic Analysis, RBC Economics Research Source: Federal Reserve Board, RBC Economics Research

10 FINANCIAL MARKETS CANADA S ECONOMY KEEPS UP ITS GROWTH STREAK Josh Nye Canada s economy extended its growth streak to seven months with HIGHLIGHTS August GDP rising 0.1%. But the increase was narrowly based, led by a Canada s economy grew for a seventh consecutive month in August, one of the better streaks seen this cycle. rebound in oil production following supply outages in July. Manufacturing, wholesale and retail trade were all Businesses surveys point to growing capacity pressures and labour lower in the month. Thanks to earlier shortages in particular. momentum, GDP is still tracking close to a 2% annualized pace in Q3. Softening retail sales and homebuilding The BoC no longer indicated rate hikes will be gradual, but that activity suggest the household sector doesn t necessarily mean they ll speed up the pace of tightening. once again provided less support than in recent years. But we think a further We don t see the overnight rate reaching a neutral setting until pickup in business investment and another add from net exports provided enough offset to keep the economy growing at a trend-like pace. On net we think GDP growth will average 2% over the second half of the year a not-too-hot, not-too-cold pace that should please the Bank of Canada given an economy operating at capacity. CANADIAN BUSINESSES REPORT GROWING CAPACITY PRESSURES The Bank of Canada s latest Business Outlook Survey showed another quarter of positive sentiment and that was before announcement of the new USMCA deal. Even if the survey was a bit stale in that sense, there were still some notable takeaways. A common theme was growing capacity pressures. More than half of firms said they d have difficulty meeting an unexpected increase in demand. The share of companies reporting labour shortages was at a decade high, and the intensity of labour shortages was near a record in Q3. More than a third of firms surveyed said they intend to respond to capacity pressures by investing and/or hiring over the next year. The latest CFIB Business Barometer also pointed to capacity issues. The share of firms reporting skilled and un/ semi-skilled labour shortages jumped higher in October. Businesses say those shortages are the most significant factor restricting their ability to increase sales or production more than insufficient demand or competitive pressures. These surveys support the Bank of Canada s conclusion that the economy is operating close to full capacity if not slightly beyond. That should help keep a floor under inflation, and argues for the BoC to continue removing monetary policy stimulus. BOC RAISES RATES, DROPS GRADUAL FROM FORWARD GUIDANCE The Bank of Canada raised rates in October for the fifth time in 15 months. The move was fully expected but Governing Council still managed to surprise markets by shifting their forward guidance. The policy statement no longer indicated rate increases will be gradual a term that markets associated with the Fed s rate hikes at every other meeting. We think Governing Council conversely wants to emphasize that they will be flexible in raising

11 rates, potentially speeding up or slowing down the pace of tightening based on incoming data particularly how households are handling higher borrowing costs. While their guidance on the pace of tightening is now less specific, the ultimate destination is clearer: they indicated the overnight rate will need to rise to a neutral stance to keep inflation on target. The BoC estimates neutral is in the range of %, well above the current 1.75% overnight rate. That change in language was seen as a hawkish development. Markets are now expecting the overnight will reach the lower end of that neutral range by the end of But we aren t ready to change our forecast for next year. Sure, the BoC says monetary policy needs to become neutral, but they didn t give a timeframe for that adjustment. We still think they ll have to be gradual in removing accommodation given household sensitivity to rising rates. Our forecast assumes higher borrowing costs will weigh on the household sector a bit more than the BoC has penciled in next year. As such, we only look for two rate increases in In our view, it won t be until 2020 that the overnight rate shifts into the central bank s neutral range. Canada's real GDP Quarter-over-quarter % change, annualized rate Forecast Bank of Canada Overnight Rate % Forecast Source: Statistics Canada, RBC Economics Research Forecasts Source: Bank of Canada, RBC Economics Research Forecasts

12 FINANCIAL MARKETS UK SENTIMENT WANING AS BREXIT DEADLINES DRAW CLOSER Josh Nye HIGHLIGHTS The UK economy picked up in Q3 but business investment continued to moderate and business surveys point to deteriorating sentiment as Brexit deadlines approach. Once again, temporary factors were behind some of the weakness in Q3 euro area growth. Australia s unemployment rate fell to a six-year low but underutilization remains elevated. UK GDP growth picked up to a 0.6% non-annualized pace in Q3, the fastest in nearly two years. Solid consumer spending and a rebound in exports provided much of the lift, while business investment fell for a third consecutive quarter. We don t expect last quarter s acceleration will be sustained as stronger consumer spending over the summer has started to fade, while capital spending continues to be weighed down by Brexit uncertainty. On the latter, October s PMI surveys showed deteriorating sentiment in both the manufacturing and services industries the composite reading is at its lowest since the month after the referendum as key Brexit deadlines draw closer. There have been bouts of optimism that a deal might be reached between the UK and EU, though passage through UK parliament remains another hurdle. Until there is greater clarity, the Bank of England will remain on the sidelines as they did in November. Economic fundamentals argue for less accommodation unemployment is low, wages are rising and core inflation is close to target. Indeed, BoE Governor Carney sounded somewhat hawkish in his latest comments, noting upside news on pay growth that should support firming price pressures. So if the central bank s assumption of a smooth Brexit transition comes to fruition, we expect they will raise rates early next year. That scenario would also likely see some release of pent up investment that should help sustain the economy s expansion. MORE TEMPORARY FACTORS WEIGHING ON EURO AREA GROWTH Euro area GDP growth fell short of expectations in Q3, slipping to a 0.2% non-annualized pace that was the weakest in four years. Italy s economy was flat, also a first since 2014, as political uncertainty appeared to weigh on domestic demand. Activity picked up in France as a number of temporary factors that limited growth over the first half of the year dissipated, while Spain s economy continued to expand at a steady rate. Germany s Q3 GDP is not yet available but growth looks to have slowed due to disruptions in the auto sector. The trade sector has also provided less support amid weaker exports to emerging markets. A confluence of transitory factors has weighed on euro area growth this year activity should pick up somewhat as those issues fade but we re not likely to see a return to the last year s impressive pace. The ECB seems willing to look through transitory wobbles in the data. Draghi indicated in October that growth was weaker than expected but not enough for the central bank to change their policy path. Asset purchases should come to an end (on a net basis) after December while policy rates are expected to start moving higher later next year. But Draghi has also indicated that monetary policy is not on a pre-set course, noting the ECB has options if the economic situation worsens.

13 RBA CONTINUES TO SOUND UPBEAT BUT RATES LIKELY TO REMAIN STEADY The Reserve Bank of Australia continued to strike a positive tone in November, taking note of stronger GDP growth over the first half of 2018 and the lowest unemployment rate in six years. They expect the economy will continue to expand at an above-trend rate going forward, lifted by business investment, exports and government spending. But they described the household sector as a source of continuing uncertainty, a view we share and one that was reinforced by soft retail sales in Q3. Consumer spending looks to have provided less support to growth over the second half of the year, and we see that trend persisting in 2019 amid a weaker housing market and limited room for households to dip into savings. Recent employment trends have been positive but wage growth will likely be slow to pick up as underutilization rates point to more slack than unemployment itself suggests. We continue to think that the process of tightening capacity translating into greater wage and inflationary pressure will be a slow one as international experience suggests. As such, the RBA is likely to keep the cash rates steady well into next year, even if they remain optimistic on the growth outlook. Eurozone real GDP growth % change, quarter-over-quarter 2 ECB refi rate % 7 Forecast 1 Forecast Source: Eurostat, RBC Economics Research Source: ECB, RBC Economics Research

14 CURRENT ANALYSIS ROBERT HOGUE CANADA S HOUSING MARKET STAYS SOFT IN OCTOBER The mortgage stress test and higher interest rates no doubt were still top-of-mind for homebuyers in October. Already-soft home resales edged down further by 1.6% from September. The annual rate of increase in benchmark prices was unchanged at 2.3%. More than half of local markets saw a monthly decline in resale activity, including Toronto, Montreal, Halifax, Calgary and Edmonton. Vancouver and Winnipeg bucked the trend with modest increases, though in the case of Vancouver the number of transactions remained near five-year lows. After rising in the previous two months, new listings fell 1.1% across Canada, which kept the majority of local markets in balance. Montreal was among the few markets where sellers had the upper hand in setting prices. Vancouver s benchmark price was up only 1.0% from a year ago, a five-year low point. More buying options have emerged for fewer buyers in the past year especially in the detached home segment. In October, annual price increases were strongest in Victoria (8.5%), Hamilton (6.8%), Ottawa (6.6%) and Montreal (6.3%). The increase in Toronto s benchmark price accelerated slightly to a rate of 2.6% from 2.0% in September. Our view is that the prevailing softness in Canada s housing market is the new norm at least for a while. We expect overall activity to stay in a holding pattern over the coming year and price gains to be limited. ONE (SMALL) STEP BACK... Clearly there isn t much to re-ignite the flame of Canada s housing market out there at this stage with many buyers still wrestling with the mortgage stress test and rising interest rates. So the news from the Canadian Real Estate Association that home resales took a relatively small step back in October shouldn t be a big surprise. Nor should it be worrisome because this is part and parcel of a cooler market. The 1.6% month-to-month drop in activity recorded in October easily fits our range-bound outlook for the overall Canadian market over the coming year.

15 FORECAST DETAIL - CANADA RBC FORECASTS OF THE ECONOMY AND FINANCIAL MARKETS = Forecast Annual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q GROWTH IN THE ECONOMY PERIOD-OVER-PERIOD ANNUALIZED PERCENT CHANGE UNLESS OTHERWISE INDICATED Household consumption Durables Semi-Durables Non-durables Services Government expenditures Residential investment Business investment Non-residential structures Machinery & equipment Final domestic demand Exports Imports Inventories (change in $b) Real gross domestic product OTHER INDICATORS YEAR-OVER-YEAR PERCENTAGE CHANGE UNLESS OTHERWISE INDICATED Business and labour Productivity Pre-tax corporate profits Unemployment rate (%)* Inflation Headline CPI Core CPI External trade Current account balance ($b) % of GDP Housing starts (000s)* Motor vehicle sales (mill., saar)* INTEREST AND EXCHANGE RATES %, END OF PERIOD Overnight Three-month Two-year Five-year year year Canadian dollar *Quarterly averages, level Source: Bank of Canada, Statistics Canada, RBC Economics Research forecasts

16 FORECAST DETAIL - UNITED STATES RBC FORECASTS OF THE ECONOMY AND FINANCIAL MARKETS = Forecast Annual Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q GROWTH IN THE ECONOMY PERIOD-OVER-PERIOD ANNUALIZED PERCENT CHANGE UNLESS OTHERWISE INDICATED Consumer spending Durables Non-durables Services Government spending Residential investment Business investment Non-residential structures Non-residential equipment Intellectual property Final domestic demand Exports Imports Inventories (change in $b) Real gross domestic product OTHER INDICATORS YEAR-OVER-YEAR PERCENTAGE CHANGE UNLESS OTHERWISE INDICATED Business and labour Productivity Pre-tax corporate profits Unemployment rate (%)* Inflation Headline CPI Core CPI External trade Current account balance ($b) % of GDP Housing starts (000s)* Motor vehicle sales (millions, saar)* INTEREST RATES %, END OF PERIOD Fed funds Three-month Two-year Five-year year year Yield curve (10s-2s) *Quarterly averages, level Source: Bank of Canada, Statistics Canada, RBC Economics Research forecasts December 2016

17 CANADA - US COMPARISONS CURRENT ECONOMIC INDICATOR Business FROM PRECEDING MONTH FROM YEAR AGO YEAR-TO- DATE LATEST MONTH FROM PRECEDING MONTH FROM YEAR AGO YEAR-TO- DATE Industrial production* Aug Oct. Manufacturing inventory - LATEST MONTH shipments ratio (level) Sep Sep. New orders in manufacturing Sep Sep. Business loans - Banks Sep Oct. Index of stock prices** Oct Oct. Households Retail sales Sep Oct. Auto sales Sep Oct. Total consumer credit*** Sep Sep. Housing starts Oct Oct. Employment Oct Oct. Prices Consumer price index Oct Oct. Producer price index**** Sep Oct. Interest rates Policy rate Oct Oct. 90-day commercial paper rates Oct Oct. Government bonds - CANADA (10 years) Oct Oct. US Seasonally adjusted % changes unless otherw ise indicated. Interest rates are levels. *The U.S. series is an index. **Canada = S&P/TSX; United States = S&P 500 ***Excludes credit unions and caisses populaires ****Canada's producer price index is not seasonally adjusted