Insights and Market Perspectives

Around the World – Week of August 28th Update

Author: Portfolio Specialist Group

August 28, 2017

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

Weekly Market Review

YELLEN AND DRAGHI OFFER LITTLE AT JACKSON HOLE SPEECHES

  • U.S. Federal Reserve Chairwoman Janet Yellen offered no comments on monetary policy or the economy during her highly anticipated speech at the Jackson Hole Symposium, instead speaking exclusively to the impact of regulation on financial stability.
  • Yellen echoed her support of financial regulations and overall regulatory burden for larger banks, which puts her at odds with President Trump’s stance.
  • European Central Bank (ECB) President Mario Draghi also refrained from any substantive comments around monetary policy. Market participants now turn to the ECB’s September meeting for any hints towards QE tapering.

U.S. HOUSING PULLS BACK

  • U.S. new home sales fell 9.4% in July to the lowest level this year. The Northeast and West regions were hardest hit, both declining over 20% during the month. New home sales are now down 8.9% from a year ago, matching 2014 lows.
  • Existing home sales in the U.S. also slipped in July, falling 1.3%. The third decline in the last four months was largely caused by weak condo sales, which fell 4.8%. Single-family homes pulled back a marginal 0.8%.
  • Positively, on an annualized basis existing home sales are still up 2.1% and the median sales price is 6.2% higher, suggesting the U.S. housing market remains strong over the longer term despite the disappointing results in July.

CANADIAN RETAIL SALES TRENDING HIGHER

  • Canadian retail sales rose 0.1% in June, as a decline in auto sales and gas station receipts negatively impacted the headline number. Excluding these two subsectors, retail sales advanced 1.1% during the month.
  • Retail volumes recorded a sixth-straight monthly gain, advancing 0.5%.
  • Regionally, sales gains were divided with only half of the provinces posting growth. British Columbia, Alberta and Nova Scotia led the gains, while Manitoba, PEI and New Brunswick lagged. Showing further signs of recovery, Alberta’s retail sales grew 10.5% annualized, trailing only British Columbia.

OTHER ECONOMIC NEWS

  • Eurozone manufacturing PMI gained 0.8 points in August, reaching 57.4. Slightly offsetting the positive results, service activity in the eurozone slipped to a seven-month low. Also reported, Japanese manufacturing reached a three-month high with a PMI of 52.8 in August while the U.S. manufacturing PMI fell to 52.5. While still within expansionary territory, U.S. manufacturing activity has declined in six of the last seven months.
  • U.S. durable goods orders fell 6.8% in July, as the closely watched proxy for future business spending was heavily impacted by declining aircraft orders. Excluding transportation, durable goods orders rose 0.5% during the month. Year over year, goods orders are up 8.1%, the fastest pace since September 2014.

What’s To Come

  • An update on employment data and Q2 GDP are the top economic releases in Canada this week. The U.S. also reports nonfarm payrolls and the latest unemployment rate on Friday. In the eurozone, both inflation and unemployment will be reported on Friday. Several countries will update manufacturing activity throughout the week, including Canada, the U.S., China and Japan.

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Written by

Portfolio Specialist Group

AGF Investments Inc.

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