AGF Weekly Perspectives – December 4th Update

Author: Portfolio Specialist Group

December 4, 2017

“A recap of last week’s top economic news and what’s to come”

Weekly Market Review

Canadian GDP slows

  • Canada’s surge of economic activity through the first half of 2017 slowed in the third quarter with GDP expanding 1.7%, less than half of the prior quarter’s pace.
  • Net exports weighed on activity during the quarter, subtracting 3.3% from growth, while consumption surged to 4.0% annualized, the strongest pace in over a decade.
  • Also included in the report, monthly GDP rose 0.2% in September as 12 of 20 major industries advanced. The goods sector led the increase, while services were mixed, though still recorded an 18th straight positive month.

Canadian employment surges

  • Canada added 79,500 jobs in November, the largest monthly increase in more than five years. The private sector accounted for the majority of net new jobs, though nearly two-thirds of the gains were a result of part-time employment gains ahead of the holiday season.
  • Across the provinces, Ontario accounted for nearly half of the gains, with strong growth in British Columbia and Quebec as well.
  • November’s booming jobs report drove the unemployment rate down to a decade low of 5.9%, from 6.3%. Average hourly earnings have increased 2.8% annualized, a strong improvement from 1.0% a year ago.

U.S. data remains strong

  • U.S. economic growth in the third quarter of 2017 was better than initially estimated, with GDP measuring 3.3%. The 0.3% upward revision came due to strong inventories and business investment measuring the strongest pace of growth in three years.
  • Forecasting continued growth, the U.S. Conference Board’s Consumer Confidence Index grew for the fifth straight month to a 17-year high in November, led by consumer and job expectations.
  • Also reported, new home sales grew 6.2% in October, over and above September’s 14.2% surge. Even after accounting for weather-related activity, new home sales on a six- and 12-month average are at decade highs.

Other economic news

  • Eurozone inflation improved slightly to 1.5% annualized in November, though missed expectations and remains below the central bank’s target. Core inflation held unchanged at 0.9%. Unemployment in the eurozone reached a nine-year low in October, measuring 8.8%.
  • The U.S. Manufacturing ISM eased 0.5 points to 58.2 in November, pulled down by employment, supplier delivery delays and inventories. Despite the second straight decline, 14 of 18 industries reported growth in the month and activity remains close to September’s 13-year high. The eurozone continues to lead with the manufacturing PMI reaching 60.1, from 60.0, helped by a pickup in France and Italy. Germany was unchanged during the month. In China, the Caixin Manufacturing PMI moved slightly lower to 50.8, from 51.0.

What’s to come

U.S. employment update

  • U.S. nonfarm payrolls for November highlight economic releases for the week, reported Friday. The Bank of Canada meets on Wednesday, where they are widely expected to hold interest rates unchanged. Also in Canada, November’s housing starts and building permits are scheduled to be reported. Elsewhere, the eurozone and Japan will release Q3 GDP data on Thursday.

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Written by

Portfolio Specialist Group

AGF Investments Inc.

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