Trade War: The Truce Between the FORECASTER - CANADA #1 ... · f As expected, the value of...

WEEKLY NEWSLETTER

François Dupuis, Vice-President and Chief Economist • Mathieu D’Anjou, Deputy Chief Economist • Carine Bergevin-Chammah, Economist Benoit P. Durocher, Senior Economist • Francis Généreux, 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 © 2019, Desjardins Group. All rights reserved.

HIGHLIGHTS

f United States: Gas is pushing up inflation again.

f United States: U.S. jobless claims are trending upwards.

f Canada: Record job creation in April.

f Canada: The trade balance improved in March.

f Canada: Multi-unit housing boosted housing starts in April.

A LOOK AHEAD

f United States: Retail sales expected to soften after strong growth in March.

f The rise in U.S. industrial production should continue to be slow.

f Canada: Total inflation could surpass the median target (2%).

FINANCIAL MARKETS

f A further escalation in protectionism harms the stock markets.

f Canada’s record employment boosts bond yields.

f Solid employment numbers give a boost to the loonie.

Trade War: The Truce Between the United States and China is Over

ECONOMIC STUDIES | MAY 10, 2019

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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ECONOMIC STUDIES

2MAY 10, 2019 | WEEKLY NEWSLETTER

UNITED STATES

f The consumer price index (CPI) saw strong growth again in April of 0.3% after gaining 0.4% in March. Like the month before, energy prices are behind the CPI push, with an increase of 2.9%. Gas prices jumped 5.7%. Food prices were down 0.1%, the first significant drop since June 2017. The core CPI, which does not include energy and food, rose just 0.1%, as it did in February and March. This is the first time since summer 2017 that it has gone up less than 0.2% for three months in a row. Like in March, further price declines are noted in used cars and clothing. The annual change in the CPI went from 1.9% to 2.0%. Core inflation, which excludes food and energy, inched up from 2.0% to 2.1%.

f Initial weekly jobless claims decreased slightly over the past week from 230,000 to 228,000. Nevertheless, they are on an upward trend. The four-week average is up from 201,500 in early April to 220,500 last week.

f The balance of trade in goods and services worsened slightly in March, with the deficit moving from US$49.3B to US$50.0B. This is the first monthly drop so far in 2019. Nominal exports of goods and services rose 1.0%, while imports gained 1.1%.

Francis Généreux, Senior economist

CANADA

f The labour market gained 106,500 jobs in April, an increase unheard of since the Labour Force Survey began in 1976. . The labour market’s strong performance is likely due in part to the number of available workers in the context of labour shortages in a number of sectors and regions. The labour force grew by 108,100 workers in April, with a particularly large increase among 15- to 24-year-olds. The unemployment rate fell from 5.8% to 5.7%

f As expected, the value of merchandise exports (+3.2%) exceeded import growth (+2.5%) in March. For the first quarter as a whole, the volume of exports declined by 7.3% (annualized) while imports were up 9.6%. In total, the merchandise trade balance expressed in real terms is thus -$2.1B in 2012 dollars in the first quarter, a deterioration of $5.6B in 2012 dollars compared to the previous quarter.

f April results in residential construction surprised, as the number of housing starts soared by 235,460 units, well above expectations. The gains were mainly in Ontario and British Columbia. For Canada as a whole, the number of multi-unit housing starts in urban centres increased to 175,732 units in April. This marks its highest level in 50 years!

Benoit P. Durocher, Senior economist

CANADAHousing starts rebound in April

Sources: Canada Mortgage and Housing Corporation and Desjardins, Economic Studies

Housing starts (annualized)

In thousands of units

140

160

180

200

220

240

260

2015 2016 2017 2018 2019

Level Trend: 6-month moving average

Key Statistics of the Week


ECONOMIC STUDIES

16,000

16,100

16,200

16,300

16,400

16,500

16,600

16,700

2,775

2,800

2,825

2,850

2,875

2,900

2,925

2,950

2019/03/28 2019/04/05 2019/04/15 2019/04/23 2019/05/01 2019/05/09

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

GRAPH 1Stock markets

Sources: Datastream and Desjardins, Economic Studies

Index Index

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

-0.90

-0.88

-0.86

-0.84

-0.82

-0.80

-0.78

-0.76

-0.74

2019/03/28 2019/04/05 2019/04/15 2019/04/23 2019/05/01 2019/05/09

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

GRAPH 2Bond markets

10-year yield

In % points In %


GRAPH 3Currency markets

US$/C$ US$/€


1.110

1.115

1.120

1.125

1.130

1.135

1.140

1.145

0.740

0.742

0.744

0.746

0.748

0.750

0.752

28/03/2019 05/04/2019 15/04/2019 23/04/2019 01/05/2019 09/05/2019

Canadian dollar (left) Euro (right)

Financial MarketsRenewed U.S. Protectionism Spurs Fresh Turbulence

The escalating trade conflict between the United States and China rattled the stock markets. President Donald Trump announced on Sunday that he would raise tariffs from 10% to 25% on $200B of Chinese imports on Friday, which he later did, citing a lack of progress in ongoing negotiations. He also threatened to tax all remaining Chinese imports. The stock markets plunged on Monday morning. Thursday saw a bit of a rebound on the U.S. stock market, as investors were still expecting an agreement to be reached. These hopes were in vain, and the S&P 500 resumed its slide on Friday morning, shedding around 3% for the week. Ongoing negotiations between the United States and China tempered Friday’s decrease, however. In Canada, the stock market was not as heavily affected, with oil prices still high and solid corporate earnings. Wednesday’s release of encouraging data on housing starts in Canada led to temporary gains on the stock market, but concerns over international trade had the upper hand. The S&P 500 index was down about 1,5% for the week at the time of writing. Stock markets in Europe and Asia were also affected by the renewed trade tensions.

The return of protectionist threats revived concerns about the future health of the global economy, and bond yields retreated across the board. U.S. yields, in particular, fell sharply on Monday and remained low throughout the week. The 2- and 10-year yields were around 2.25% and 2.45%, respectively, on Friday morning. Canadian bond yields stood out, wiping out most of their weekly losses on Friday morning in response to the record job creation in Canada. The yields are currently at about 1.60% for the 2-year yield and 1.70% for the 10-year yield.

The recent protectionist wave also created volatility on the currency market. Generally speaking, the greenback lost ground against several currencies, especially the yen and the Swiss franc due to their preferred safe-haven statuses. The euro managed to edge up above US$1.12. The Canadian dollar saw gains on Friday in particular, fuelled by excellent job numbers. It remained below US$0.75, however. The Chinese yuan was more severely shaken, rattled by the resurgence of U.S. protectionism. China’s currency climbed to more than 6.80 yuan/US$.

Hendrix Vachon, Senior Economist

Carine Bergevin-Chammah, Economist

ECONOMIC STUDIES


A Look Ahead

UNITED STATES

Retail sales (April) – Retail sales jumped 1.6% in March, the strongest growth since September 2017, although a pullback is likely in April. The drop in new automobile sales should push retail automobile sales down. That may be partly offset by higher gas prices, which will boost service station sales as they did in March. Food services should drop slightly after a 0.8% gain, the strongest since July 2018. All other sales should grow about 0.2%. An increase of only 0.1% is anticipated in sales, not including automobiles and gas. Overall, a downtick of 0.1% is expected.

Industrial production (April) – Industrial production has been treading water since the beginning of the year. It was down 0.3% in January, up 0.1% in February, and back down 0.1% in March. December 2018 marked its most recent peak. We do not expect industrial production to behave any differently in April. Hours worked in the manufacturing sector point to a considerable drop for automobiles and a modest grain for the rest of the sector. Manufacturing output should shrink 0.1%. Mining is expected to stagnate after declining 0.8% in March. The main positive contribution to industrial production should be a 2.0% gain in energy output (after a 0.2% increase). Industrial production overall should increase by 0.1%.

Housing starts (April) – Housing starts remained very low in March. Not counting the 1,298,000 units recorded in January, housing starts for December, February and March were only 1,140,000 units on average. We expect an increase for April. Since new construction is still far below the number of building permits, things will have to rebound sooner or later. Homebuilder confidence continued to improve in April. Sales of new single-family homes have been on an upswing, although last month’s loss of 2,500 jobs in residential construction is not a good sign. We are still expecting housing starts to reach 1,225,000 units in April, but, based on recent results, the risk to this forecast is tilted to the downside.

Leading indicator (April) – In March, the leading indicator posted its strongest monthly growth since September 2018. Another uptick is expected for April. The markets should provide the main positive contribution, followed by consumer confidence and credit conditions. The ISM index and building permits should curb the leading indicator’s monthly change. Overall, it should go up 0.2%. That should support a rise in the leading indicator’s 3-month and 6-month changes.

University of Michigan consumer confidence index (May – preliminary) – After gaining 4.6 points in March, the University of Michigan confidence index retreated 1.2 points in April. Among the positives for the month of May were the 5.0-point rise in the Conference Board index in April; that index tends to outpace the Michigan index. The other confidence indicators are a mixed bag: the TIPP was up in May while the Bloomberg weekly index has been down in recent weeks. Other factors seem less positive: continuing gas price hikes, an upswing in weekly jobless claims and lower market levels in the last few sessions. All told, we expect the University of Michigan index to go on treading water.

WEDNESDAY May 15 - 8:30April m/m Consensus 0.2% Desjardins -0.1%March 1.6%

WEDNESDAY May 15 - 9:15April m/m Consensus 0.0% Desjardins 0.1%March -0.1%

FRIDAY May 17 - 10:00April m/m Consensus 0.2% Desjardins 0.2%March 0.4%

FRIDAY May 17 - 10:00May Consensus 97.5 Desjardins 97.0April 97.2

THURSDAY May 16 - 8:30April ann. rate Consensus 1,209,000 Desjardins 1,225,000March 1,139,000


ECONOMIC STUDIES

CANADA

Consumer price index (April) – Gas prices continued to climb in April, with a monthly bump of 10.2% according to weekly surveys at the pumps. That could lead to a +0.3% contribution to the monthly change in total CPI. Seasonal price fluctuations are usually up around +0.1% in April. Factoring in the slight uptrend in the other components, April could end with a monthly increase of 0.5% in total CPI. The total annual inflation rate could climb from 1.9% to 2.1%.

Manufacturing sales (March) – Merchandise exports were up 3.2% in March, which bodes well for manufacturing sales. The automobile products, aeronautical products and energy products sectors could all be way up. The bottom line is that total sales should be up 0.7%.

OVERSEAS

Euro zone: Economic indicators – Several euro zone indicators will be released this week. European industrial production for March will be out on Tuesday. It had dipped 0.2% in February. Germany’s 0.5% gain is a positive sign, but the decreases of 0.9% in France and Italy are less good news. The preliminary estimate of Q1 real GDP will be released on Wednesday. The first version revealed an astonishing non-annualized gain of 0.4%. This time there will be more details of per-country growth. On Thursday we will learn the trade balance for March. The final version of the consumer price index for April will be released on Friday.

DURING THE WEEK

WEDNESDAY May 15 - 8:30April m/m Consensus 0.4% Desjardins 0.5%March 0.7%

THURSDAY May 16 - 8:30March m/m Consensus 1.5% Desjardins 0.7%February -0.2%

ECONOMIC STUDIES


Economic IndicatorsWeek of May 13 to 17, 2019

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 13 --- ---

TUESDAY 14 3:15 Speech of the New York Fed President, J. Williams 8:30 Export prices (m/m) April 0.6% 0.5% 0.7% 8:30 Import prices (m/m) April 0.8% 0.6% 0.6% 12:45 Speech of the Kansas City Fed President, E. George

WEDNESDAY 15 8:30 Empire manufacturing index May 8.0 8.5 10.1 8:30 Retail sales Total (m/m) April 0.2% -0.1% 1.6% Excluding automobiles (m/m) April 0.7% 0.5% 1.2% 9:15 Industrial production (m/m) April 0.0% 0.1% -0.1% 9:15 Production capacity utilization rates April 78.7% 78.8% 78.8% 10:00 NAHB housing market index May 64 n/a 63 10:00 Business inventories (m/m) March 0.0% 0.0% 0.3% 12:00 Speech of the Richmond Fed President, T. Barkin 16:00 Net foreign security purchases (US$B) March n/a n/a 51.9

THURSDAY 16 8:30 Initial unemployment claims May 6-10 220,000 225,000 228,000 8:30 Philadelphia Fed index May 10.0 8.5 8.5 8:30 Housing starts (ann. rate) April 1,209,000 1,225,000 1,139,000 8:30 Building permits (ann. rate) April 1,290,000 1,265,000 1,288,000

FRIDAY 17 10:00 Leading indicator (m/m) April 0.2% 0.2% 0.4% 10:00 Michigan’s consumer sentiment index – preliminary May 97.5 97.0 97.2

MONDAY 13 --- ---

TUESDAY 14 --- ---

WEDNESDAY 15 8:30 Consumer price index Total (m/m) April 0.4% 0.5% 0.7% Excluding food and energy (m/m) April n/a 0.0% 0.3% Total (y/y) April 2.0% 2.1% 1.9% Excluding food and energy (y/y) April n/a 2.0% 1.9% 9:00 Existing home sales April

THURSDAY 16 8:30 International transactions in securities ($B) March n/a 11.50 12.05 8:30 Manufacturing sales (m/m) March 1.5% 0.7% -0.2%

FRIDAY 17 --- ---


ECONOMIC STUDIES

Economic IndicatorsWeek of May 13 to 17, 2019

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

MONDAY 13Japan 1:00 Leading indicator – preliminary March 96.3 97.1 Japan 1:00 Coincident indicator – preliminary March 99.6 100.4 Japan 19:50 Current account (¥B) March 1710.9 1,957.6

TUESDAY 14Germany 2:00 Consumerpriceindex–final April 1.0% 2.0% 1.0% 2.0%United Kingdom 4:30 ILO unemployment rate March 3.9% 3.9% Euro zone 5:00 Industrial production March -0.3% -0.8% -0.2% -0.3%Germany 5:00 ZEW survey – Current situation May 6.0 5.5 Germany 5:00 ZEW survey – Expectations May 5.0 3.1 China 22:00 Industrial production April 6.5% 8.5%China 22:00 Retail sales April 8.6% 8.7%

WEDNESDAY 15Germany 2:00 Real GDP – preliminary Q1 0.4% 0.7% 0.0% 0.6%France 2:45 Consumerpriceindex–final April 0.2% 1.2% 0.2% 1.2%Euro zone 5:00 Net change in employment – preliminary Q1 n/a n/a 0.3% 1.3%Euro zone 5:00 Real GDP – preliminary Q1 0.4% 1.2% 0.4% 1.2%Japan 19:50 Producer price index April 0.2% 1.1% 0.3% 1.3%

THURSDAY 16France 1:30 ILO unemployment rate Q1 8.7% 8.8% Euro zone 5:00 Trade balance (€B) March 19.0 19.5 Italy 5:00 Trade balance (€M) March n/a 3,268 Mexico 14:00 Bank of Mexico meeting May 8.25% 8.25%

FRIDAY 17Japan 0:30 Tertiary industry activity index March 0.1% -0.6% Euro zone 5:00 Construction March n/a n/a 3.0% 5.2%Euro zone 5:00 Consumer price index April 0.7% 1.7% 1.0% 1.4%

ECONOMIC STUDIES


REF. MONTH LEVEL-1 month -3 months -6 months -1 year

Leading indicator (2010 = 100) March 111.9 0.4 0.4 0.4 2.8

ISM manufacturing index1 April 52.8 55.3 56.6 57.5 57.9

ISM non-manufacturing index1 April 55.5 56.1 56.7 60.0 57.2

Cons. confidence Conference Board (1985 = 100)1 April 129.2 124.2 121.7 137.9 125.6Personal consumption expenditure (2009 $B) March 13,128 0.7 1.0 1.3 2.9Disposable personal income (2009 $B) March 14,595 -0.2 -0.3 1.4 2.3Consumer credit ($B) March* 4,052 0.3 1.1 2.5 4.9Retail sales ($M) March 514,062 1.6 2.1 1.4 3.6

Excluding automobiles ($M) March 408,567 1.2 2.4 0.9 3.6Industrial production (2007 = 100) March 110.2 -0.1 -0.3 0.5 2.8

Production capacity utilization rate (%)1 March 78.8 79.0 79.5 79.3 78.2New machinery orders ($M) March 508,192 1.9 1.6 -1.0 2.0New durable good orders ($M) March 257,999 2.6 1.4 -0.8 2.1Business inventories ($B) Feb. 2,017 0.3 1.9 2.9 4.9

Housing starts (k)1 March 1,139 1,142 1,140 1,237 1,327

Building permits (k)1 March 1,288 1,291 1,326 1,270 1,377

New home sales (k)1 March 692.0 662.0 562.0 609.0 672.0

Existing home sales (k)1 March 5,210 5,480 5,000 5,180 5,510

Commercial surplus ($M)1 March* -50,002 -49,285 -59,900 -55,699 -47,448

Nonfarm employment (k)2 April 151,095 263.0 508.0 1,243 2,620

Unemployment rate (%)1 April 3.6 3.8 4.0 3.8 3.9Consumer price (1982–1984 = 100) April* 255.0 0.3 0.9 0.9 2.0

Excluding food and energy April* 261.7 0.1 0.4 1.1 2.1Personal cons. expenditure deflator (2009 = 100) March 109.2 0.2 0.3 0.6 1.5

Excluding food and energy March 111.1 0.0 0.2 0.7 1.6Producer price (2009 = 100) April* 118.1 0.2 0.9 0.5 2.3Export prices (2000 = 100) March 127.1 0.7 0.8 -0.2 0.6Import prices (2000 = 100) March 126.5 0.6 1.7 -0.9 0.0

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.

UNITED STATESMonthly economic indicators

VARIATION (%)

UNITED STATESQuarterly economic indicators

REF. QUART. LEVELQuart. ann. 1 year 2018 2017 2016

Gross domestic product (2009 $B) 2019 Q1 18,912 3.2 3.2 2.9 2.2 1.6Consumption (2009 $B) 2019 Q1 13,071 1.2 2.7 2.6 2.5 2.7Government spending (2009 $B) 2019 Q1 3,208 2.4 1.8 1.5 -0.1 1.4Residential investment (2009 $B) 2019 Q1 596.1 -2.8 -3.1 -0.3 3.3 6.5Non-residential investment (2009 $B) 2019 Q1 2,782 2.7 4.8 6.9 5.3 0.5Business inventory change (2009 $B)1 2019 Q1 128.4 --- --- 45.0 22.5 23.4Exports (2009 $B) 2019 Q1 2,577 3.7 2.3 4.0 3.0 -0.1Imports (2009 $B) 2019 Q1 3,476 -3.7 1.6 4.5 4.6 1.9Final domestic demand (2009 $B) 2019 Q1 19,643 1.4 2.6 2.9 2.5 2.3GDP deflator (2009 = 100) 2019 Q1 111.4 0.9 1.9 2.2 1.9 1.1Labor productivity (2009 = 100) 2019 Q1 107.0 3.6 2.4 1.3 1.2 0.2Unit labor cost (2009 = 100) 2019 Q1 109.7 -0.9 0.1 1.4 2.2 0.9Employment cost index (Dec. 2005 = 100) 2019 Q1 136.2 3.0 2.8 2.8 2.4 2.3Current account balance ($B)1 2018 Q4 -134.4 --- --- -488.5 -449.1 -432.9

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) Feb. 1,946,379 -0.1 0.1 0.1 1.1Industrial production (2007 $M) Feb. 398,802 -0.4 -0.9 -1.4 0.0Manufacturing sales ($M) Feb. 56,638 -0.2 -0.9 -2.5 0.9Housing starts (k)1 April* 235.5 192.0 203.4 213.4 214.7Building permits ($M) March* 8,063 2.1 -8.7 -1.3 -2.4Retail sales ($M) Feb. 50,615 0.8 0.2 -0.7 1.8

Excluding automobiles ($M) Feb. 36,872 0.6 -0.5 -1.5 1.3Wholesale trade sales ($M) Feb. 63,726 0.3 1.3 0.2 2.4Commercial surplus ($M)1 March* -3,211 -3,418 -4,878 -833.6 -3,505

Exports ($M) March* 49,046 3.2 6.2 -2.0 1.8Imports ($M) March* 52,257 2.5 2.4 2.8 1.1

Employment (k)2 April* 19,029 106.5 51.7 51.4 35.5

Unemployment rate (%)1 April* 5.7 5.8 5.8 5.7 5.9Average weekly earnings ($) Feb. 1,007 -0.3 -0.3 0.1 1.1Number of salaried employees (k)2 Feb. 16,874 31.7 33.7 33.9 33.7Consumer price (2002 = 100) March 135.4 0.7 1.5 1.3 1.9

Excluding food and energy March 130.0 0.3 1.2 1.5 1.9Excluding 8 volatile items March 133.5 0.3 1.3 1.2 1.6

Industrial product price (2002 = 100) March 118.6 1.3 1.2 -0.3 1.5Raw materials price (2002 = 100) March 108.3 2.8 9.8 -1.6 -1.5Money supply M1+ ($M) March 1,004,583 0.4 -0.3 1.2 3.4

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. LEVELQuart. ann. 1 year 2018 2017 2016

Gross domestic product (2007 $M) 2018 Q4 2,063,439 0.4 1.6 1.8 3.0 1.1Household consumption (2007 $M) 2018 Q4 1,166,783 0.7 1.3 2.1 3.6 2.1Government consumption (2007 $M) 2018 Q4 417,805 2.0 2.1 2.5 2.1 1.8Residential investment (2007 $M) 2018 Q4 133,761 -14.7 -7.5 -2.3 2.4 3.5Non-residential investment (2007 $M) 2018 Q4 180,315 -10.9 -4.3 1.7 2.5 -9.9Business inventory change (2007 $M)1 2018 Q4 13,422 --- --- 13,873 17,582 2,291Exports (2007 $M) 2018 Q4 664,437 -0.2 4.5 3.3 1.1 1.3Imports (2007 $M) 2018 Q4 654,843 -1.1 -0.1 2.9 4.2 0.0Final domestic demand (2007 $M) 2018 Q4 2,036,317 -1.5 0.2 1.9 3.1 0.6GDP deflator (2007 = 100) 2018 Q4 107.7 -3.3 0.5 1.7 2.5 0.8Labour productivity (2007 = 100) 2018 Q4 106.2 -1.6 0.2 0.0 1.9 0.3Unit labour cost (2007 = 100) 2018 Q4 107.3 4.7 1.2 2.5 0.8 -1.6Current account balance ($M)1 2018 Q4 -15,483 --- --- -58,681 -60,130 -64,882

Production capacity utilization rate (%)1 2018 Q4 81.7 --- --- 82.8 81.6 79.2Disposable personal income ($M) 2018 Q4 1,237,732 3.3 2.2 3.5 4.5 0.3Corporate net operating surplus (2007 $M) 2018 Q4 263,372 -38.1 -5.8 0.5 20.1 6.4

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

CANADAQuarterly economic indicators

VARIATION (%) ANNUAL VARIATION (%)

ECONOMIC STUDIES


ACTUALMay 10 May 3 -1 month -3 months -6 months -1 year Higher Average Lower

United StatesFederal funds – target 2.50 2.50 2.50 2.50 2.25 1.75 2.50 2.23 1.75Treasury bill – 3 months 2.42 2.38 2.39 2.38 2.31 1.88 2.43 2.21 1.86Treasury bonds – 2 years 2.23 2.35 2.40 2.47 2.94 2.53 2.97 2.60 2.22Treasury bonds – 5 years 2.22 2.33 2.37 2.44 3.05 2.84 3.09 2.68 2.16Treasury bonds – 10 years 2.43 2.53 2.56 2.63 3.19 2.98 3.23 2.84 2.37Treasury bonds – 30 years 2.85 2.93 2.97 2.97 3.39 3.10 3.45 3.09 2.81S&P 500 index (level) 2,835 2,946 2,907 2,708 2,781 2,728 2,946 2,768 2,351DJIA index (level) 25,499 26,505 26,412 25,106 25,989 24,831 26,828 25,271 21,792Gold price (US$/ounce) 1,288 1,281 1,292 1,314 1,211 1,321 1,345 1,258 1,179CRB index (level) 178.97 181.77 188.36 178.04 188.45 203.56 206.38 188.49 168.36WTI oil (US$/barrel) 61.60 61.98 63.86 52.75 60.19 70.69 77.41 62.48 44.48

CanadaOvernight – target 1.75 1.75 1.75 1.75 1.75 1.25 1.75 1.60 1.25Treasury bill – 3 months 1.67 1.67 1.68 1.65 1.71 1.21 1.73 1.55 1.18Treasury bonds – 2 years 1.60 1.64 1.63 1.77 2.33 1.96 2.36 1.95 1.46Treasury bonds – 5 years 1.57 1.62 1.64 1.79 2.43 2.21 2.48 2.02 1.43Treasury bonds – 10 years 1.69 1.77 1.78 1.88 2.50 2.38 2.60 2.12 1.54Treasury bonds – 30 years 1.92 2.01 2.06 2.14 2.53 2.41 2.58 2.25 1.84

Spread with the U.S. rate (% points)Overnight – target -0.75 -0.75 -0.75 -0.75 -0.50 -0.50 -0.50 -0.63 -0.75Treasury bill – 3 months -0.75 -0.71 -0.71 -0.73 -0.60 -0.67 -0.48 -0.66 -0.80Treasury bonds – 2 years -0.64 -0.71 -0.77 -0.70 -0.61 -0.57 -0.46 -0.65 -0.85Treasury bonds – 5 years -0.66 -0.71 -0.73 -0.65 -0.62 -0.63 -0.51 -0.66 -0.81Treasury bonds – 10 years -0.74 -0.76 -0.78 -0.75 -0.69 -0.60 -0.57 -0.72 -0.89Treasury bonds – 30 years -0.94 -0.92 -0.91 -0.83 -0.86 -0.69 -0.68 -0.84 -1.02

S&P/TSX index (level) 16,155 16,494 16,481 15,633 15,274 15,983 16,669 15,817 13,780Exchange rate (C$/US$) 1.3435 1.3421 1.3322 1.3278 1.3211 1.2793 1.3639 1.3194 1.2787Exchange rate (C$/€) 1.5107 1.5034 1.5057 1.5045 1.4976 1.5280 1.5643 1.5130 1.4771

OverseasEuro zoneECB – Refinancing rate 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Exchange rate (US$/€) 1.1246 1.1202 1.1303 1.1331 1.1336 1.1944 1.1927 1.1469 1.1132

United KingdomBoE – Base rate 0.75 0.75 0.75 0.75 0.75 0.50 0.75 0.69 0.50Bonds – 10 years 1.12 1.22 1.21 1.15 1.50 1.48 1.72 1.32 0.99FTSE index (level) 7,194 7,381 7,437 7,071 7,105 7,725 7,877 7,291 6,585Exchange rate (US$/£) 1.3030 1.3174 1.3084 1.2948 1.2977 1.3544 1.3556 1.3029 1.2486

GermanyBonds – 10 years -0.05 0.02 0.05 0.08 0.41 0.56 0.64 0.28 -0.08DAX index (level) 12,028 12,413 12,000 10,907 11,529 13,001 13,170 11,857 10,382

JapanBoJ – Main policy rate -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10Nikkei index (level) 21,345 22,259 21,871 20,333 22,250 22,758 24,271 21,956 19,156Exchange rate (US$/¥) 109.61 111.11 112.03 109.74 113.83 109.40 114.54 111.29 107.67

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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