Canadian Retail Sales Disappoint - Desjardins

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: Housing starts next in line to be affected by the hurricanes.

f After declining as a result of Hurricane Harvey, U.S. industrial production started improving in September.

f United States: Lowest jobless claims numbers since winter 1973.

f Canada: Total annual inflation rate up from 1.4% to 1.6%.

f Canada: Manufacturing sales were up in August, as retail sales slumped.

f Canadian businesses remain confident.

A LOOK AHEAD

f United States: Hurricanes have likely had an adverse effect on real GDP growth in Q3.

f The Bank of Canada is expected to take a break from its monetary tightening.

FINANCIAL MARKETS

f The hope of tax reform unleashes optimism in markets.

f Bond markets in doubt about another rate increase in Canada this year.

f The loonie falls back to below US$0.80.

Canadian Retail Sales Disappoint

ECONOMIC STUDIES | OCTOBER 20, 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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ECONOMIC STUDIES

2OCTOBER 20, 2017 | WEEKLY NEWSLETTER

UNITED STATES

f Industrial production was up 0.3% in September after falling 0.7% in August (revised from -0.9%), due largely to Hurricane Harvey. Manufacturing output inched up 0.1% despite further drops in the oil and chemical products sectors. The mining sector grew 0.4%. Energy production bounced back with a 1.5% increase after dropping 4.9% in August.

f The Philadelphia Fed’s manufacturing index rose in October from 23.8 to 27.9, while the New York Fed’s Empire index jumped from 24.4 to 30.2.

f Housing starts fell 4.7% in September after declining 0.2% in August. The effect of the hurricanes can be seen in the 15.3% drop in new construction of single-family homes in the southern United States. Declines posted in other regions are in multi-unit housing. Building permits, meanwhile, fell 4.5%.

f After being inflated by the hurricanes, new weekly jobless claims decreased during the week ending October 14 to 222,000, their lowest level since winter 1973.

f In September, the leading indicator suffered its first monthly decline since August 2016, dropping 0.2% after a gain of 0.4% in August 2017. The main negative contributions came from hours worked, jobless claims and building permits.

f Sales of existing homes rose 0.7% in September after shrinking 1.7% in August. This is the first increase since May. Annualized sales inched up from 5,350,000 to 5,390,000 units. The only region that went down is the southern United States, which continues to be affected by the hurricanes and where resales dropped 0.9%, including an 11.1% contraction in condominiums.

Francis Généreux, Senior economist

CANADA

f The total consumer price index (CPI) was up 0.2% in September. The total annual inflation rate edged up from 1.4% to 1.6%. Clothing, which posted much softer seasonal price increases than we usually see, was the biggest surprise. That said, the annual change in the total CPI continued to climb, but this rise could begin to sputter as of next month as the prices at the pump point to a significant price drop in October now that everything is back to normal after the hurricanes in the southern United States.

f The Bank of Canada’s Business Outlook Survey shows continued confidence among respondents. Businesses are expecting sustained sales growth. Respondents also indicate that there have been greater pressures on production capacity and on the labour market over the past year, which suggests that unused capacity is about to be absorbed.

f The value of retail sales was down 0.3% in August, versus a consensus forecast of a 0.5% increase. Expressed in real terms, retail sales fell 0.7%. This reduction will curb economic growth in August. Certain one-time factors appear to have affected retail trade. Furthermore, the 2.9% drop in grocery store sales is surprising—this marks the sharpest decline since January 2015. Excluding grocery stores, retail sales ticked up 0.1% last August, suggesting that the overall trend in retail sales remains positive.

f The value of manufacturing sales rebounded with a 1.6% increase in August, putting an end to two consecutive months of declines. Among others, car sales surged 12.9% during the month. In real terms, total sales were up 1.2%, while inventories pulled back 0.3%. The manufacturing sector is therefore expected to make a positive contribution to economic growth in August.

Benoit P. Durocher, Senior economist

Key Statistics of the Week


ECONOMIC STUDIES

14,900

15,050

15,200

15,350

15,500

15,650

15,800

15,950

2,450

2,475

2,500

2,525

2,550

2,575

2017/09/07 2017/09/15 2017/09/25 2017/10/03 2017/10/11 2017/10/19

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

GRAPH 1 Stock markets

Sources: Datastream and Desjardins, Economic Studies

Index Index

1.9

2.0

2.1

2.2

2.3

2.4

-0.4

-0.3

-0.2

-0.1

0.0

2017/09/07 2017/09/15 2017/09/25 2017/10/03 2017/10/11 2017/10/19

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

GRAPH 2 Bond markets

10-year yield

In % points In %


GRAPH 3 Currency markets

US$/C$ US$/€


1.17

1.18

1.19

1.20

1.21

0.79

0.80

0.81

0.82

0.83

2017/09/07 2017/09/15 2017/09/25 2017/10/03 2017/10/11 2017/10/19

Canadian dollar (left) Euro (right)

Financial MarketsDisappointing Canadian Data Weighs on the Loonie

Without making any spectacular gains, the S&P 500 was able to stay above 2,550 points for most of the week. A little more volatility was felt as of Thursday, when renewed tensions in Spain spooked global stock markets. In Europe, the Euro Stoxx 600 index had its worst session since the end of August. The S&P 500 also fell sharply on Thursday, but managed to end the session with a very slim gain. Optimism was the name of the game on Friday, after the U.S. Senate adopted a budget for fiscal 2018, marking an important step for the much-awaited tax reform. The S&P/TSX was mostly flat after several weeks of gains. A drop in oil prices put a bit of a dent in the energy sector, which the industrial sector helped offset. The agreement between Bombardier and Airbus on the C Series was among the more favourable elements.

In bond markets, U.S. investors paid close attention to rumours about Janet Yellen’s (possible) successor as Federal Reserve Chair. The name of John B. Taylor kept popping up among the candidates favoured to replace Janet Yellen, which some investors viewed as potentially hawkish by mid-week. The budget announcement in the United States on Friday gave longer term yields another boost. In Canada, the Governor of the Bank of Canada (BoC) issued new dovish comments over the weekend, putting the spreads between U.S. and Canadian yields on a downward trajectory. The disappointing data on inflation and retail sales strengthened this trend on Friday morning. Markets are increasingly doubtful that the BoC will order another rate hike before the end of the year.

The greenback seesawed this week, ending the week on a high note, buoyed by the optimism spurred by the Senate’s budget adoption. The euro was once again rattled by the political uncertainties in Catalonia, wiping out part of the ground recovered last week. In step with the trend for European currencies, the pound fell back to below US$1.32. The uncertainties surrounding Brexit remain. The loonie hovered at around US$0.80. Friday’s session was more difficult for the loonie, with Canada’s currency declining to below US$0.795 due to increasing doubts about monetary tightening in Canada.

Jimmy Jean, CFA, Senior economist

Hendrix Vachon, Senior economist

ECONOMIC STUDIES


A Look Ahead

UNITED STATES

New durable goods orders (September) – As usual, new durable goods orders have been seesawing in recent months due to fluctuations in the aviation sector. After plummeting 56.0% in July, this sector (including military aircraft) recorded growth of 15.2% in August. A drop is expected in September, despite an increase in Boeing orders. That is because seasonal adjustments are expected to reverse this gain. Durable goods orders excluding transportation should see growth of about 1.0% based on good performance in machinery production and, especially, the high ISM manufacturing index. Total orders are expected to be stagnant, however.

New home sales (September) – In August, sales of new single-family homes were hit by Hurricane Harvey. They were down 4.7% in the southern United States and 3.4% nationally. Hurricane Irma’s sweep through Florida may have adversely affected October data, but that should be offset by the post-Harvey rebound. We note that mortgage applications surged in mid-September after having declined in August. The number of building permits for single-family homes also points to higher sales. We expect sales to go to 585,000 units.

Real GDP (Q3 – advance estimate) – Like many other economic indicators, real GDP growth in Q3 has definitely been affected by the hurricanes that hit in August and September. August data even point to a sharp slowdown relative to the annualized gain of 3.1% recorded in the spring. However, the September rebound is keeping fears of too sharp a drop at bay. Growth in consumption should be around 2.0%, despite an expected decline in non-durable goods. That is because the rebound in car and retail sales over the past month saved the day. After a strong gain of 6.7% in Q3, a slowdown in investment is expected, particularly in construction. However, business inventories should make a positive contribution to growth, just like net exports. All in all, real GDP should rise 2.3%.

CANADA

Wholesale sales (August) – There has been much volatility in wholesale sales in recent months. Under the circumstances, the strong increase of 1.5% observed in July is likely to be followed by far more subdued gains in August. It is important to note that the value of merchandise exports dropped 1.0% during the month, which will affect some wholesalers. That said, the trend in retail trade continues to be very positive, a favourable situation for wholesalers. The bottom line is that a slight increase in wholesale sales is expected.

Bank of Canada meeting (October) – After raising its key interest rates twice this summer, once in July and then in September, the Bank of Canada (BoC) may take a break in October and opt for the status quo. It is worth noting that the robust growth of the Canadian economy observed in the first half of 2017 has lost some steam recently, reducing the urgency for monetary tightening in the country. An update of the economic and financial outlooks from the monetary authorities will also be unveiled Wednesday with the publication of the Monetary Policy Report. Despite the recent slowdown in some economic indicators, a favourable outlook from the BoC is to be expected, which will pave the way for further increases in key interest rates in the future, possibly in December or January.

WEDNESDAY October 25 - 10:00September ann. rate Consensus 555,000 Desjardins 585,000August 560,000

FRIDAY October 27 - 8:30Q3 2017 – 1st est. ann. rate Consensus 2.6% Desjardins 2.3%Q2 2017 – 3rd est. 3.1%

MONDAY October 23 - 8:30August m/m Consensus 0.4% Desjardins 0.5%July 1.5%

WEDNESDAY October 25 - 10:00October Consensus 1.00% Desjardins 1.00%September 6 1.00%

WEDNESDAY October 25 - 8:30September m/m Consensus 1.0% Desjardins 0.0%August 2.0%


ECONOMIC STUDIES

OVERSEAS

United Kingdom: Real GDP (Q3) – The British economy is going through a more difficult phase. The resilience recorded in 2016 in the wake of the June Brexit referendum is now deflated. Average non-annualized growth in real GDP was just 0.3% in Q1 2017. A similar performance is expected for Q3, as higher inflation caused by the falling pound continues to erode households’ buying power and as uncertainty affects investment.

Euro zone: European Central Bank meeting (October) – The European Central Bank (ECB) suggested that it would be announcing changes to its asset purchase program. It is currently spending €60B per month. It could announce a pullback effective early next year. It could also give longer-term indications regarding the duration of its program and the pace of future reductions in its purchases. At the same time, it will likely not want to send too hawkish a signal to avoid giving the euro new impetus. The ECB showed some discomfort in September with the rising euro, which is having a downward effect on its inflation forecasts. Among the economic indicators to be published during the week in the euro zone, a preliminary October version of consumer confidence will be released Monday. The index has been trending upward for several months. The euro zone’s PMI indexes will be published Tuesday, whereas Germany’s IFO business indexes will be released Wednesday.

WEDNESDAY October 25 - 4:30Q3 2017 q/q Consensus 0.3%Q2 2017 0.3%

THURSDAY October 26 - 7:45October Consensus 0.00% Desjardins 0.00%September 7 0.00%

ECONOMIC STUDIES


Economic IndicatorsWeek of October 23 to 27, 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 23 --- ---

TUESDAY 24 --- ---

WEDNESDAY 25 8:30 Durable goods orders (m/m) Sept. 1.0% 0.0% 2.0% 10:00 New home sales (ann. rate) Sept. 555,000 585,000 560,000

THURSDAY 26 8:30 Initial unemployment claims Oct. 16-20 235,000 233,000 222,000 8:30 Goods trade balance – preliminary (US$B) Sept. -63.9 -63,5 -63.3 8:30 Retail inventories – preliminary (m/m) Sept. n/a n/a 0.7% 8:30 Wholesale inventories – preliminary (m/m) Sept. n/a n/a 0.9% 10:00 Pending home sales (m/m) Sept. 0.6% n/a -2.6%

FRIDAY 27 8:30 Real GDP (ann. rate) Q3f 2.6% 2.3% 3.1% 10:00 Michigan’sconsumersentimentindex–final Oct. 101.0 101.1 101.1

MONDAY 23 8:30 Wholesale sales (m/m) Aug. 0.4% 0.5% 1.5% 8:30 Wholesale inventories (m/m) Aug. n/a 0.5% 0.7%

TUESDAY 24 16:00 Federal Government’s 2017 Economic and Fiscal Update

WEDNESDAY 25 10:00 Bank of Canada meeting Oct. 1.00% 1.00% 1.00% 10:00 Release of the Bank of Canada Monetary Policy Report

THURSDAY 26 8:30 Average weekly earnings (y/y) Aug. n/a 1.4% 1.8% 8:30 Number of salaried employees (m/m) Aug. n/a 0.0% 0.1%

FRIDAY 27 --- ---


ECONOMIC STUDIES

Economic IndicatorsWeek of October 23 to 27, 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

MONDAY 23Japan 1:00 Leadingindicator–final Aug. n/a 106.8Japan 1:00 Coincidentindicator–final Aug. n/a 117.6Eurozone 10:00 Consumerconfidence–preliminary Oct. -1.1 -1.2

TUESDAY 24France 2:45 Businessconfidence Oct. 109 109France 2:45 Production outlook Oct. 23 23 France 3:00 PMI composite index – preliminary Oct. 57.0 57.1 France 3:00 PMI manufacturing index – preliminary Oct. 56.0 56.1 France 3:00 PMI services index – preliminary Oct. 56.9 57.0 Germany 3:30 PMI composite index – preliminary Oct. 57.6 57.7 Germany 3:30 PMI manufacturing index – preliminary Oct. 60.0 60.6 Germany 3:30 PMI services index – preliminary Oct. 55.6 55.6 Euro zone 4:00 PMI composite index – preliminary Oct. 56.5 56.7 Euro zone 4:00 PMI manufacturing index – preliminary Oct. 57.8 58.1 Euro zone 4:00 PMI services index – preliminary Oct. 55.6 55.8

WEDNESDAY 25Brazil --- Bank of Brazil meeting Oct. 7.50% 8.25% Germany 4:00 IFO survey – Business climate Oct. 115.0 115.2 Germany 4:00 IFO survey – Current situation Oct. 123.5 123.6 Germany 4:00 IFO survey – Expectations Oct. 107.3 107.4 United Kingdom 4:30 Index of services Aug. 0.3% -0.2% United Kingdom 4:30 Real GDP – preliminary Q3 0.3% 1.5% 0.3% 1.5%

THURSDAY 26Germany 2:00 Consumerconfidence Nov. 10.8 10.8Euro zone 4:00 Money supply M3 Sept. 5.0% 5.0% Italy 4:00 Consumerconfidence Oct. 114.7 115.5Italy 4:00 Businessconfidence Oct. 110.1 110.4Italy 4:00 Economicconfidence Oct. n/a 108.0Norway 4:00 Bank of Norway meeting Oct. 0.50% 0.50% Euro zone 7:45 Minutes of the European Central Bank meeting Oct. 0.00% 0.00% Japan 19:30 Consumer price index Sept. 0.7% 0.7%Japan 19:30 Consumer price index – Tokyo Oct. 0.1% 0.5%

FRIDAY 27France 2:45 Consumerconfidence Oct. 101 101Russia 6:30 Bank of Russia meeting Oct. 8.25% 8.50%

ECONOMIC STUDIES


REF. MONTH LEVEL

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

Leading indicator (2010 = 100) Sept.* 128.6 -0.2 0.5 1.7 4.0

ISM manufacturing index1 Sept. 60.8 58.8 57.8 57.2 51.7

ISM non-manufacturing index1 Sept. 59.8 55.3 57.4 55.2 56.6

Cons. confidence Conference Board (1985 = 100)1 Sept. 119.8 120.4 117.3 124.9 103.5Personal consumption expenditure (2009 $B) Aug. 11,890 -0.1 0.3 1.4 2.5Disposable personal income (2009 $B) Aug. 12,802 -0.1 0.0 1.0 1.2Consumer credit ($B) Aug. 3,766 0.3 1.1 2.4 5.5Retail sales ($M) Sept. 483,895 1.6 2.0 2.3 4.4

Excluding automobiles ($M) Sept. 383,834 1.0 2.1 1.9 4.6Industrial production (2007 = 100) Sept.* 104.6 0.3 -0.6 0.7 1.6

Production capacity utilization rate (%)1 Sept.* 76.0 75.8 76.6 75.9 75.6New machinery orders ($M) Aug. 471,684 1.2 1.0 1.4 5.7New durable good orders ($M) Aug. 233,521 2.0 1.1 2.7 5.5Business inventories ($B) Aug. 1,889 0.7 1.5 1.8 3.6

Housing starts (k)1 Sept.* 1,127 1,183 1,217 1,189 1,062

Building permits (k)1 Sept.* 1,215 1,272 1,275 1,260 1,270

New home sales (k)1 Aug. 560.0 580.0 606.0 615.0 567.0

Existing home sales (k)1 Sept.* 5,390 5,350 5,510 5,700 5,470

Commercial surplus ($M)1 Aug. -42,395 -43,558 -46,395 -44,507 -41,130

Nonfarm employment (k)2 Sept. 146,659 -33.0 274.0 836.0 1,777

Unemployment rate (%)1 Sept. 4.2 4.4 4.4 4.5 4.9Consumer price (1982–1984 = 100) Sept. 246.4 0.5 1.1 1.1 2.2

Excluding food and energy Sept. 252.9 0.1 0.5 0.7 1.7Personal cons. expenditure deflator (2009 = 100) Aug. 112.6 0.2 0.3 0.3 1.4

Excluding food and energy Aug. 113.2 0.1 0.3 0.4 1.3Producer price (2009 = 100) Sept. 113.4 0.4 0.5 1.3 2.5Export prices (2000 = 100) Sept.* 124.0 0.8 2.0 1.6 2.9Import prices (2000 = 100) Sept.* 123.8 0.7 1.1 1.1 2.7

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 17,031 3.1 2.2 1.5 2.9 2.6Consumption (2009 $B) 2017 Q2 11,853 3.3 2.7 2.7 3.6 2.9Government spending (2009 $B) 2017 Q2 2,895 -0.2 0.0 0.8 1.4 -0.6Residential investment (2009 $B) 2017 Q2 594.1 -7.3 1.3 5.5 10.2 3.5Non-residential investment (2009 $B) 2017 Q2 2,301 6.7 4.3 -0.6 2.3 6.9

Business inventory change (2009 $B)1 2017 Q2 5.5 --- --- 33.4 100.6 67.8Exports (2009 $B) 2017 Q2 2,181 3.5 3.2 -0.3 0.4 4.3Imports (2009 $B) 2017 Q2 2,795 1.5 4.1 1.3 5.0 4.5Final domestic demand (2009 $B) 2017 Q2 17,618 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 Q2 -123.1 --- --- -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) July 1,741,014 0.0 0.9 1.9 3.8Industrial production (2007 $M) July 375,142 -0.5 2.1 3.0 7.3Manufacturing sales ($M) Aug.* 53,532 1.6 -2.7 0.4 4.3

Housing starts (k)1 Sept. 217.1 225.9 213.4 251.6 218.8Building permits ($M) Aug. 7,543 -5.5 -4.1 1.5 0.6Retail sales ($M) Aug.* 48,926 -0.3 0.0 1.9 6.9

Excluding automobiles ($M) Aug.* 35,766 -0.7 -0.2 1.0 5.1Wholesale trade sales ($M) July 62,382 1.5 2.0 4.9 10.0

Commercial surplus ($M)1 Aug. -3,413 -2,983 -1,076 -1,382 -1,928Exports ($M) Aug. 43,630 -1.0 -10.6 -3.7 -0.2Imports ($M) Aug. 47,043 0.0 -5.7 0.7 3.0

Employment (k)2 Sept. 18,454 10.0 14.4 24.3 26.6

Unemployment rate (%)1 Sept. 6.2 6.2 6.5 6.7 7.0Average weekly earnings ($) July 970.5 -0.1 0.0 0.4 1.8

Number of salaried employees (k)2 July 16,277 8.6 48.9 34.2 25.0Consumer price (2002 = 100) Sept.* 130.8 0.2 0.3 0.7 1.6

Excluding food and energy Sept.* 125.8 0.2 0.2 0.5 1.2Excluding 8 volatile items Sept.* 129.9 0.2 0.1 0.2 0.8

Industrial product price (2002 = 100) Aug. 112.1 0.3 -2.4 -1.0 1.9Raw materials price (2002 = 100) Aug. 96.3 1.0 -3.5 -5.1 6.1Money supply M1+ ($M) Aug. 943,426 0.0 0.7 4.5 9.2

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

Oct. 20 Oct. 13 -1 month -3 months -6 months -1 year Higher Average Lower

United StatesFederal funds – target 1.25 1.25 1.25 1.25 1.00 0.50 1.25 0.95 0.50Treasury bill – 3 months 1.10 1.07 1.01 1.14 0.78 0.33 1.16 0.78 0.29Treasury bonds – 2 years 1.57 1.50 1.44 1.34 1.18 0.83 1.57 1.26 0.80Treasury bonds – 5 years 2.01 1.91 1.87 1.80 1.76 1.24 2.13 1.83 1.24Treasury bonds – 10 years 2.38 2.28 2.26 2.23 2.24 1.74 2.61 2.30 1.76Treasury bonds – 30 years 2.90 2.81 2.80 2.80 2.89 2.49 3.19 2.92 2.50S&P 500 index (level) 2,569 2,553 2,502 2,473 2,349 2,141 2,569 2,367 2,085DJIA index (level) 23,238 22,872 22,350 21,580 20,548 18,146 23,238 20,807 17,888Gold price (US$/ounce) 1,283 1,300 1,296 1,252 1,286 1,266 1,347 1,245 1,127CRB index (level) 184.25 184.83 183.57 176.66 181.87 189.40 195.14 184.03 166.50WTI oil (US$/barrel) 51.53 51.43 50.33 45.78 49.64 50.61 54.48 49.33 42.48

CanadaOvernight – target 1.00 1.00 1.00 0.75 0.50 0.50 1.00 0.60 0.50Treasury bill – 3 months 0.93 0.97 1.00 0.70 0.54 0.49 1.01 0.60 0.42Treasury bonds – 2 years 1.46 1.54 1.60 1.25 0.72 0.52 1.61 0.94 0.52Treasury bonds – 5 years 1.69 1.73 1.82 1.52 1.01 0.65 1.82 1.23 0.66Treasury bonds – 10 years 2.02 2.04 2.11 1.88 1.47 1.13 2.13 1.71 1.14Treasury bonds – 30 years 2.37 2.39 2.45 2.25 2.14 1.80 2.53 2.26 1.81

Spread with the U.S. rate (% points)Overnight – target -0.25 -0.25 -0.25 -0.50 -0.50 0.00 0.00 -0.35 -0.75Treasury bill – 3 months -0.17 -0.10 -0.01 -0.44 -0.24 0.16 0.22 -0.18 -0.54Treasury bonds – 2 years -0.10 0.04 0.16 -0.09 -0.47 -0.31 0.25 -0.32 -0.63Treasury bonds – 5 years -0.32 -0.18 -0.06 -0.28 -0.75 -0.59 0.08 -0.60 -0.89Treasury bonds – 10 years -0.36 -0.24 -0.15 -0.35 -0.77 -0.61 -0.07 -0.59 -0.84Treasury bonds – 30 years -0.53 -0.42 -0.34 -0.55 -0.76 -0.70 -0.32 -0.66 -0.88

S&P/TSX index (level) 15,873 15,807 15,454 15,183 15,614 14,939 15,922 15,347 14,509Exchange rate (C$/US$) 1.2604 1.2468 1.2338 1.2539 1.3500 1.3333 1.3749 1.3102 1.2110Exchange rate (C$/€) 1.4859 1.4741 1.4749 1.4624 1.4482 1.4512 1.5210 1.4515 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$/€) 1.1789 1.1823 1.1954 1.1663 1.0728 1.0884 1.2035 1.1092 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 1.33 1.40 1.40 1.24 0.98 1.08 1.51 1.21 0.87FTSE index (level) 7,519 7,535 7,311 7,453 7,115 7,020 7,556 7,270 6,693Exchange rate (US$/£) 1.3187 1.3287 1.3493 1.2996 1.2813 1.2235 1.3593 1.2721 1.2049

GermanyBonds – 10 years 0.45 0.40 0.45 0.44 0.25 -0.07 0.57 0.32 -0.05DAX index (level) 12,958 12,992 12,592 12,240 12,049 10,711 13,043 12,014 10,259

JapanBoJ – Main policy rate -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10 -0.10Nikkei index (level) 21,458 21,155 20,296 20,100 18,621 17,185 21,458 19,381 16,252Exchange rate (US$/¥) 113.42 111.86 111.99 111.13 109.09 103.84 118.18 111.86 102.99

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.

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