September 2015 C Q2/15 GDP

Transcription

1 September 215 C Q2/15 GDP B : P US O

2 Volume 39, Number 9 September 215 RBC ECONOMICS RESEARCH CRAIG WRIGHT SENIOR VICE PRESIDENT & CHIEF ECONOMIST DAWN DESJARDINS ASSISTANT CHIEF ECONOMIST Financial Markets & Financial System PAUL FERLEY ASSISTANT CHIEF ECONOMIST Macroeconomics ROBERT HOGUE SENIOR ECONOMIST Regional Economies NATHAN JANZEN SENIOR ECONOMIST Macroeconomics LAURA COOPER ECONOMIST Public Policy JOSH NYE ECONOMIST Financial Markets and Macroeconomics GERARD WALSH ECONOMIST Sector Analysis and Provincial Economies IN BRIEF H 2 C Q2/15 GDP Canada s second-quarter 215 annualized GDP dropped by.5% at an annual rate following a.8% decline in the first quarter. 5 B : P US The outlook for the global economy was muddied during the summer, as the emerging market economies, led by China, weakened. Conversely, in many advanced economies, growth accelerated and was led by a robust increase in the US, a solid gain in the euro area, and a rebound in the UK. 9 O The outlook for provincial economies continued to be divided between oil producers and oil consumers. The plunge in oil prices since mid-214 has significantly dimmed prospects for Newfoundland and Labrador, Alberta, and Saskatchewan, whereas it offers some upside scope for oilconsuming provinces. EDITOR Phoebe Cassamajor 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, 2 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. Visit our web site...at and Get your issues delivered by ... by sending your request along with your address to rbceconomicsresearch@rbc.com.

3 PAUL FERLEY, DAWN DESJARDINS, NATHAN JANZEN, LAURA COOPER, JOSH NYE CURRENT TRENDS C Q2/15 GDP HIGHLIGHTS Second-quarter 215 GDP growth in Canada dropped by a smaller than expected.5% following a.8% decline in the first quarter. Employment rose by 12, in August 215 to build on July s mild 6,6 gain. Canadian retail sales rose by.5% in July 215, slightly below market expecta- ons for a.7% gain, following a revised.4% (was.6%) increase in June and a.9% jump in May. Canadian housing starts unexpectedly surged by 12.2% to an annualized 216,9 in August 215, handily bea ng market expecta ons for a decline to 19,5 units. The July 215 nominal merchandise trade deficit unexpectedly shrank further to $.6 billion. August 215 CPI held steady compared to July, with the year-over-year rate at 1.3%. Real GDP % change, month-over-month Source: Sta s cs Canada Unemployment Rate % of labour force Source: Sta s cs Canada LATEST AVAILABLE: JUNE RELEASE DATE: SEPTEMBER 1, 215 Canada s second-quarter 215 annualized gross domestic product (GDP) dropped by.5% at an annual rate following a.8% decline in the first quarter. The weakness in the quarter was mainly concentrated in business investment, which declined by 12.% in the second quarter after dropping 17.7% in the first quarter. A drawdown in inventories subtracted 1.2 percentage points from the overall growth rate. A main offset to the weakness was consumer spending rising by 2.3% following a disappointing.5% rise in the first quarter. Net exports added.6 percentage points to the annualized GDP growth that resulted largely from imports dropping by 1.5% in the quarter, with exports rising by a modest.4%. C A, LATEST AVAILABLE: AUGUST RELEASE DATE: SEPTEMBER 4, 215 Employment rose by 12, in August 215 to build on July s mild 6,6 gain. The result defied market expectations for employment to fall by 5,. The unemployment rate rose to 7.% after holding at 6.8% for six consecutive months. The increase reflected a surge in the labour force of 52,. The participation rate increased to 65.9% from 65.7% in July. Employment in the goods-producing industries fell for the third consecutive month. In primary industries, employment inched upward by 2,3. 2 ECONOSCOPE, ROYAL BANK OF CANADA

4 Offsetting the dip in the goods sector was a 17,2 gain in the services-producing industries. On an industry basis, the results were mixed, with gains in public administration, education, health care, and business support services and losses in transportation and warehousing, professional services, and information and accommodation. The number of full-time employed increased by 54,4 in August, significantly outpacing the 17,3 cut announced in July. Part-time employment, conversely, dropped by 42,4. So far this year, full-time employment is up by 174, with part-time employment down by 59,2. August s report showed that the job gains were concentrated in the public sector with private-sector jobs increasing by a modest 6,3. C.5% J LATEST AVAILABLE: JULY RELEASE DATE: SEPTEMBER 23, 215 Canadian retail sales rose by.5% in July 215, slightly below market expectations for a.7% gain, following a revised.4% (was.6%) increase in June and a.9% jump in May. Controlling for the effect of prices, the volume of sales rose by.2% in July following a downwardly revised.1% decline (previously reported as flat) in June and a.2% increase in May. Nominal sales rose in six out of 1 provinces, led by a 1.% rise in Ontario with a.4% dip in British Columbia providing the main source of partial offset. O - A LATEST AVAILABLE: AUGUST RELEASE DATE: SEPTEMBER 9, 215 Canadian housing starts unexpectedly surged by 12.2% to an annualized 216,9 in August 215, handily beating market expectations for a decline to 19,5 units (see Housing Starts chart on page 4). Urban multiple-unit starts fuelled the headline increase (19.5%) while single-unit starts rose modestly (1.4%). A multiples-led surge in Ontario (89%) propelled the headline increase, thereby overshadowing declines in all other regions of the country: British Columbia (-27.8%), Quebec (-4.2%), Prairies (-1.5%), and Atlantic Canada (-31.3%). C J LATEST AVAILABLE: JULY RELEASE DATE: SEPTEMBER 3, 215 The July 215 nominal merchandise trade deficit shrank to $.6 billion from June s deficit of $.8 billion (see Merchandise Trade chart on next page). The improvement occurred with exports rising by $1. billion (2.3%) that offset a $.8 billion (1.7%) gain in imports. On a Retail Sales % change, month-over-month Source: Sta s cs Canada ECONOMY AT A GLANCE % change from: Latest Previous Year month month ago Real GDP Jun.5.6 Industrial produc on Jun Employment Aug Unemployment rate* Aug Manufacturing Produc on Jun Employment Aug Shipments Jul New orders Jul Inventories Jul Retail sales Jul Car sales Jul Housing starts (s)* Aug Exports Jul Imports Jul Trade balance ($billlions)* Jul Consumer prices Aug. 1.3 * Levels are shown for the latest period and the same period a year earlier. Source: Sta s cs Canada, RBC Economics Research ECONOSCOPE, ROYAL BANK OF CANADA 3

5 Housing Starts Thousands Source: Canadian Mortgage and Housing Corpora on Merchandise Trade C$ billions, annualized 6 volumes basis (using 27 chained dollars), the trade surplus jumped to $2. billion from $1.3 billion in June that resulted mainly from exports rising by 1.5%, although imports also made a marginal contribution in falling by.3%. C 1.3% A, 2.1% LATEST AVAILABLE: AUGUST RELEASE DATE: SEPTEMBER 18, 215 The August 215 consumer price index (CPI) held steady compared to July, with the year-over-year rate at 1.3%. Core CPI rose by.2% in the month, although the yearover-year rate eased to 2.1% from July s 2.4%. The core inflation rate has held above the Bank of Canada s mid-range target of 2.% for more than a year. Even in August 215, when some of the earlier upward pressure from transitory factors related to a surge in telecommunication charges in August 214 dropped out of the measure, the rate was 2.1%, with 6.7% of the index posting increases of 2.% or more Exports 3 Imports Source: Sta s cs Canada Consumer Price Index % change, year-over-year Source: Sta s cs Canada 4 ECONOSCOPE, ROYAL BANK OF CANADA

6 CRAIG WRIGHT, DAWN DESJARDINS, PAUL FERLEY, NATHAN JANZEN ECONOMICS AND FINANCIAL MARKETS OUTLOOK B : P US The outlook for the global economy was muddied during the summer, as the emerging market economies, led by China, weakened. Conversely, in many advanced economies, growth accelerated and was led by a robust increase in the US, a solid gain in the euro area, and a rebound in the UK. Canada s economy put in another weak performance in the second quarter of 215, although the monthly data augur well for a return to positive growth. On balance, the softening in the emerging market economies created downside risk to the world economy being able to maintain the 3.4% growth rate recorded during the prior three years. C. Increased anxiety about China s economy and the stability of its financial markets fuelled concerns about global growth and international trade. Reports of weakening domestic demand and export activity elicited a strong reaction from the People s Bank of China (PBoC), which devalued the currency and cut interest rates. In a flight to safety, investors turned to fixedincome assets and the US dollar, thereby resulting in yields on G-7 government bonds remaining near historic lows while the trade-weighted US dollar rose by 1.8% in the month to stand almost 16% above the year-ago level. F. Markets are assessing the likely effects of the jump in financial market volatility on confidence and the economic outlook. Central banks are incorporating this attendant risk into their projections, given the commensurate tightening in financial conditions and downside risks to inflation presented by the recent drop in commodity prices. We expect that these developments will contribute to the European Central Bank (ECB) deciding to extend its quantitative-easing programme, the Bank of England remaining sidelined until the middle of next year, and the Bank of Canada on hold until late in 216. These developments have already complicated the outlook for the Federal Reserve, which decided to hold the policy rate steady on September 17, due to heightened concerns about global developments, both in the world economy and financial markets, which the Fed said may restrain economic activity somewhat. D. Recent data confirm that the divergence in growth momentum between the emerging and advanced economies continued into mid-year. Since mid-213, the purchasing managers index for the advanced economies exceeded the emerging markets index, with the gap widening in recent months as the emerging index slipped. Despite this divergence, the global composite index continues to signal that the world economy is expanding, thereby supporting forecasts for global output to grow by 3.3% in 215. Global GDP growth in 216 is forecasted to accelerate to 3.8% and to be supported by a further strengthening in activity in some of the large, advanced economies. Weighted Composite PMI 5 = expansion Global 46 Emerging 44 Advanced Source: RBC Economics Research Policy Rates: Interna onal %, eop Forecast Canada US UK Eurozone Source: BoE, ECB, Fed Reserve, BoC, RBC Economics Research US Real GDP Quarter-over-quarter annualized % change Forecast f 16f Real GDP Source: Bureau of Economics Analysis, RBC Economics Research ECONOSCOPE, ROYAL BANK OF CANADA 5

7 Unemployment Rate: US % Forecast Source: Bureau of Labor Sta s cs, RBC Economics Research West Texas Intermediate (WTI) Average US$/bbl f 216f WTI $5.5 $ Source: Haver Analy cs, RBC Economics Research US Interest Rates % Forecast 1-year bond yield Fed Funds Rate Source: FRB, US Treasury, RBC Economics Research Forecasts C -. Many countries are experiencing strengthening economic growth, yet central banks are maintaining very stimulative monetary policy. Even the Federal Reserve, which is close to attaining its dual mandate of full employment and inflation at 2% in the medium term, held back in September, preferring to keep the system flush to encourage businesses and consumers to spend and to counter any hit to confidence from the recent financial market volatility. The ECB, having weathered the Greek crisis, is proceeding with its quantitative-easing program, and we expect it will act on its promise to implement additional policy support. We expect the Bank of England to raise the policy rate in May 216, with the process toward normalizing its policy stance likely to be a slow and drawn-out affair. The Bank of Canada conversely is expected to hold the policy rate steady following two cuts earlier in the year; however, the Bank could act again if financial market volatility threatens to derail the expected rebound in growth in the second half of 215. US. The US economy roared back to life in the second quarter, following a subdued start to 215. Real GDP increased at a.6% annualized pace in the first quarter, with activity stifled by poor weather conditions, a west coast port strike, and reduced investment by energy companies. The reversal of two of the three factors that dampened activity in the first quarter fuelled a significant swing in output, with real GDP expanding at a 3.7% annualized pace in the second quarter. T US - H2. We expect US growth to average 3% in the second half of 215, backed by strength in labour market conditions, accommodative financial conditions, lower energy costs, and improving access to credit. The combination of the stronger than expected gain in GDP in the second quarter and solid increases projected for the second half of the year resulted in our 215 forecast rising to 2.6% from 2.3% in our June update. We maintained our call for the US economy to grow by 3.% in 216. L. The US labour market continued to pump out jobs in the first eight months of 215, with the average monthly increase of 212, mildly slower than the 26, pace of 214. This persistent strength in hiring resulted in the unemployment rate slipping to 5.1% in August, which is within the Fed s estimated full-employment range of 4.9% to 5.2%. C. Against this backdrop, US consumers pulled out their wallets this summer, with total home sales reaching the highest level since before the recession and auto sales running at their fastest pace in a decade. With favourable conditions expected to continue, US consumers are forecasted to provide support to the economy, with spending growth averaging close to 3% in the second half of 215 and only slowing modestly in ECONOSCOPE, ROYAL BANK OF CANADA

8 E. After the sharp pullback by energy companies in the first half of 215, data for July and August suggested some stabilization, although the recent drop in oil prices could lead to a further reduction in rig counts in September. We, however, do not expect further cuts, as our forecast assumes that oil prices will recover somewhat after falling to a cycle low in late August. This assumption underpins our call that the weight on investment from the retrenchment by energy companies will dissipate in 216. Our baseline assumption is that the price of a barrel of West Texas Intermediate (WTI) oil averages $5.5 in 215, $57. in 216, and with a greater recovery to $65. expected in 217. S F R. Strengthening growth in 215 and persistent tightening in labour markets are likely to outweigh concerns about the effect of the recent financial market volatility leading the Fed to raise the fed funds target before the end of 215. The prospect of the Federal Reserve raising interest rates while its trading partners maintain extraordinarily stimulative monetary conditions will likely see the US dollar continue to appreciate in the near term. As growth momentum in other countries accelerates, the US dollar rally is likely to stall. C. Canada s economy contracted mildly in both the first and second quarters of 215, thereby causing a flurry of recession talk. We see this talk as being misplaced, because the depth of the decline was marginal and the weakness was concentrated in the energy sector. As well, the pullback does not appear to have been sustained, as the June GDP gain of.5% strongly suggests a return to positive growth in the third quarter. Year-to-date employment gains have been running at 14, per month, and although the unemployment rate inched upward to 7.% in August, following six consecutive months of holding at 6.8%, this reflected a surge in the labour force, thereby signalling improved confidence of Canadian workers. I. Inclement weather saw Canadian consumers hunker down in the first quarter, although the hibernation was short lived, with spending accelerating in the second quarter. The rebound reflected a rise in purchases of durable goods, including autos, which continued to accelerate in the third quarter. We project consumption growth will be firmer in 216 and will be backed by a lower profile for gasoline prices than previously expected, and our expectation that the labour market will continue to generate job growth and wage gains next year. H. Canada s housing market is poised to post one of its better years on record in 215 despite the Canadian economy being hit by a significantly negative shock (plunge in oil prices) and a spike in condo comple- Debt Service Ra o (principal and interest) Principal & interest payments on mortgage & non-mortgage debt as % of PDI, seasonally adjusted Long-run average 6 Including principal payments Interest-only payments Source: Sta s cs Canada, RBC Economics Research Canada Home Resales Thousands of units Forecast Source: Canadian Real Estate Associa on, RBC Economics Research Canada: Business Investment by Industry Annual % change Projec on Oil & gas investment Total business capital spending ex. o&g Total business capital spending Source: Sta s cs Canada, RBC Economics Research ECONOSCOPE, ROYAL BANK OF CANADA 7

9 Canada Exports by Sector Indexed to 27 Q2 14 Energy Non-energy commodi es 13 Non commodi es Source: Sta s cs Canada, RBC Economics Research Canadian Dollar Forecast US$/C$ 1.1 Forecast 1.5 Parity f 16f.6 US$/C$ Source: Bank of Canada, RBC Economics Research Forecasts Canada Interest Rates % BoC overnight rate Forecast 1-year bond yield Source: Bank of Canada, RBC Economics Research Forecasts tions in some markets. Low interest rates and the resilient labour market continued to provide substantial stimulus for housing demand. Our forecast calls for home resales at the national level to rise by 5.% to 55,4 units in 215, which would mark the second-highest level on record. Home prices are forecasted to rise by 4.6%, which would be little changed from the 4.8% registered in 214. Our forecast assumes a slight easing in resale activity in 216, as interest rates begin to increase, with price gains slowing to 3.2% in that year. C. Business fixed investment fell at double-digit rates in both the first and second quarters of 215 and was weighed downward by massive cuts by energy companies. The disappointing pace of export growth in the first half of 215 appears to have ended by mid-year, which combined with firming consumer spending, is likely to begin to exert pressure on capacity, thereby resulting in a pickup in investment in both structures and machinery. A modest recovery in oil prices in 216 will likely limit the degree by which energy producers reduce investment activity. Companies outside of energy conversely are expected to increase investment gradually, and we anticipate spending by these companies will be sufficient to offset the pullback by energy producers in 216, thereby resulting in flat business investment growth next year. C. Slowing trade activity globally, and more specifically between Canada and the US, contributed to the economy s soft performance in the first half of 215. The combination of the snapback in US growth and a substantially weaker Canadian dollar looks to have finally fuelled a pickup in demand for Canadian exports, which we expect to continue. Low commodity prices, especially oil, combined with a widening in interest rate spreads as the Federal Reserve raises its policy rate while the Bank of Canada remains on the sidelines will likely result in the Canadian dollar weakening to 73.5 US cents by the end of 245. The currency is likely to stabilize and recover modestly in 216, as oil prices trend higher and markets price for the next move by the Bank of Canada to be a rate hike rather than a cut. B C. The Bank of Canada aggressively eased monetary policy this year, with the January rate cut followed with another 25 basis point reduction in July. The Bank s updated forecast anticipated a decline in real GDP in the second quarter to be followed by a gradual recovery in growth in the second half of the year. We expect the Bank of Canada to hold the overnight rate at.5% until late 216. The combination of the economy approaching full capacity and the risk to the inflation outlook shifting to the upside will likely result in the Bank looking to reverse the rate cuts put in place in 215, with the overnight rate forecasted to rise to 1.% by the end of year yields are forecasted to rise gradually, as the inflation rate steadies around the Bank s 2% target and US Treasury yields move higher. 8 ECONOSCOPE, ROYAL BANK OF CANADA

10 PAUL FERLEY, ROBERT HOGUE, LAURA COOPER, GERARD WALSH PROVINCIAL OUTLOOK O I - The economic data so far this year have confirmed the significant toll that the drop in global oil prices is taking on Canada s oil-producing provinces. The clearest indication of stress has been the plummeting of energy-related investment, which in turn, has been a catalyst for weakness in related business activity (e.g., manufacturing and professional services), consumer spending (e.g., big-ticket items such as motor vehicles and home resales), and government revenues in these provinces. To make matters worse, Alberta, Saskatchewan, and Newfoundland and Labrador have suffered from bad luck in the form of widespread forest fires, drought conditions, and operational disruptions at oil facilities. RBC s downwardly revised assumptions for oil prices also imply that tough conditions in the energy sector are unlikely to turn around as quickly or as greatly as we had previously thought. For all these reasons, we lowered our real GDP forecasts for these three provinces.. We also reduced our growth forecasts for most oil-consuming provinces, because the pickup in non-energy exports and non-energy capital investment that we expect has been delayed. While running ahead of a year ago, exports from provinces such as Ontario and Quebec lost momentum earlier this year due to supply-chain disruptions arising from unusually poor weather and labour strikes at western ports in the US, as well as auto assembly plant retooling in Ontario. R. Despite the bigger than expected bumps on the road this year, we continue to expect that growth in oil-consuming provinces will more than compensate for real GDP declines in Newfoundland and Labrador, Alberta, and Saskatchewan. Going forward, we believe that the rotation toward external sources of growth increasingly will gain traction in export-dependent provinces such as Ontario, Manitoba, Quebec, and British Columbia, thanks to a strong US economy and the low value of the Canadian dollar. B.C. MAN. ONT. P.E.I. QUE. N.B. N.S. SASK. ALTA. N.&L. % REAL GDP GROWTH CANADA B.C. MAN. ONT. SASK. CANADA N.S. QUE. P.E.I. N.B. N.&L. ALTA HIGHLIGHTS The outlook for provincial economies con nued to be divided between oil producers and oil consumers. The plunge in oil prices since mid-214 has significantly dimmed prospects for Newfoundland and Labrador, Alberta, and Saskatchewan, whereas it offers some upside scope for oil-consuming provinces. In our latest edi on of Provincial Outlook, we further downgraded our growth outlooks for 215 for the three oilproducing provinces, which are consistent with RBC s downward revision to oil price assump ons although other factors (e.g., drought in Alberta and Saskatchewan, and opera onal issues at oil produc on facili es in Alberta and Newfoundland and Labrador) also contributed. We project all three provinces to contract in 215. Much of the offse ng gains that we expect to occur in oil-consuming provinces seems to be delayed. A number of temporary factors conspired to postpone the li off of growth in provinces such as Ontario, Quebec, and Manitoba during the first half of 215. Consequently, we also reduced our growth forecasts for 215 for the majority of oil-consuming provinces; s ll, we project all these provincial economies to con nue to expand. The outlook for 216 shows broad, albeit modest, improvement across provinces. We expect oil-consuming provinces to accelerate their pace and oil-producing provinces to return to growth mode. Source: Statistics Canada, RBC Economics Research ECONOSCOPE, ROYAL BANK OF CANADA 9

11 F C 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 (s)* 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 September ECONOSCOPE, ROYAL BANK OF CANADA

12 F U S 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 (s)* Motor vehicle sales (millions, saar)* INTEREST RATES %, END OF PERIOD Fed funds Three-month Two-year Five-year year year Yield curve (1s-2s) * Quarterly averages, level Source: US Bureau of Economic Analysis, RBC Economics Research forecasts September 215 ECONOSCOPE, ROYAL BANK OF CANADA 11

13 CURRENT TRENDS CURRENT ECONOMIC INDICATORS C - US C B F F Y - L F F Y - L P Y T - M P Y T - M M A D M A D Industrial production Jun Aug. Mfg. inventory - shipments ratio (level) Jul Jul. New orders in manufacturing Jul Jul. Business loans - Banks Jul Aug. Index of stock prices Aug Aug. H Retail sales Jul Aug. Auto sales Jul Aug. Total consumer credit Jun Jul. Housing starts Aug Aug. Employment Aug Aug. P Consumer price index Aug Aug. Producer price index Jul Aug. I Policy rate Aug Aug. 9-day commercial paper rates Aug Aug. Government bonds (1 years) Aug Aug. Seasonally adjusted % changes unless otherwise indicated. Interest rates are levels. 1 The U.S. series is an index. 2 Canada = S&P/TSX; United States = S&P 5 3 Excludes credit unions and caisses populaires. 4 Canada s producer price index is not seasonally adjusted. September ECONOSCOPE, ROYAL BANK OF CANADA

14 ISSN Printed in Canada