AGF Weekly Perspectives – February 12th Update
Author: Portfolio Specialist Group
February 12, 2018
“A recap of last week’s top economic news and what’s to come”
Weekly Market Review
Canada suffers employment setback
- Canadian employment ended a streak of 17 consecutive monthly gains with 88,000 jobs shed in January, the largest monthly decline since 2009. The pullback was concentrated in a loss of 137,000 part-time positions, which was the largest decline on record. This more than offset a fairly positive month in full-time employment, which added 49,000 positions.
- Regionally, Ontario was worst off with employment down over 50,000, impacted by the province’s minimum wage increase to start the year. The $14 minimum marks the highest in the country and likely influenced a surge in wage growth, increasing to 3.3% in January, from 2.7%.
- Despite the weak report, Canada’s unemployment rate was fairly stable with a 0.1% increase to 5.9%.
Canada’s housing advances
- Canadian housing starts added 216,200 annualized units in January, slightly below the 12-month average though still firmly in an upward trend. Multi-unit starts led the gain, more than doubling the amount of single-unit starts.
- January’s gain was somewhat concentrated in Ontario, accounting for about 40% of the starts. Alberta and Saskatchewan also reported marginal increases, while starts were lower in all other provinces. British Columbia pulled back, though remains healthy after recording the largest number of starts since 1990 in the prior quarter. Similarly, Quebec weakened after a strong second half to 2017, though Montreal recorded its largest monthly decline since 1990 in January.
- Also reported, Canadian building permits rose 4.8% in December, rebounding from a significant decline in the prior month, highlighted by increasing plans for single-family homes in Ontario and multi-family homes in British Columbia.
U.S. activity surges higher
- The U.S. ISM Non-Manufacturing PMI recorded a 96th consecutive month of expansion, surging 3.9 points to 59.9 in January and reaching a 12-year high.
- New orders led the gains, along with growing activity in employment and business, while the supplier delivery category was flat in the month.
- Growth was widespread, with 15 of 18 sub-indices reporting gains in January, a slight improvement from the prior month.
Other economic news
- The Bank of England unanimously held rates unchanged, though surprised with hawkish comments in suggesting policy will “need to be tightened somewhat earlier and by a somewhat greater degree…than anticipated at the time of the November report”. The central bank expects above-target inflation will ease over the course of the year, and upwardly revised GDP expectations for 2018 and 2019.
- Eurozone retail sales slipped 1.1% in December as fuel and clothing reported lower volumes during the month. On an annualized basis, retail sales rose 1.9%, a sizable slowdown from 3.9% levels in the prior report.
What’s to come
- U.S. inflation and retail sales data will be closely watched as market participants seek evidence to support belief that despite recent market volatility, U.S. economic data remains in an upward trend. Elsewhere, Japan is set to report Q4 GDP data during the week, while the U.K. reports January’s inflation and retail sales data.