Around the World – Week of July 31 Update

Author: Portfolio Specialist Group

July 31, 2017

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

Weekly Market Review


  • Canada’s GDP tripled expectations with a sizable 0.6% advance in May, the seventh straight positive month. This brought annualized growth to 4.6%, which is the fastest year-over-year output since 2000.
  • The strong report was supported by a rebound in the oil and gas sector, which alone accounted for nearly 80% of the gain. Goods producing industries also grew 1.6%, as manufacturing rose 1.1%.
  • May’s strong report puts Canada on track for roughly 3% GDP growth this year and further strengthens the Bank of Canada’s plans for tightening policy.


  • The U.S. economy grew at a 2.6% annualized pace in the second quarter of 2017, more than double the first quarter’s revised pace of 1.2%.
  • Consumer spending, which accounts for over 60% of total GDP, was up 2.8%, led by a gain in durable goods spending. Spending on non-durables and services advanced.
  • After seasonally slower growth in the first quarter, economic growth will require a strong second half to 2017 in order to reach the U.S. Federal Reserve’s (Fed) 2.2% median forecast.


  • The Fed offered very few specifics in their latest policy statement, though appear committed to plans for balance sheet reduction.
  • Wording around the timeframe for tightening was adjusted from “this year” in the prior statement to “relatively soon”, which suggests specifics may be announced at the next meeting in September.
  • The Fed also tweaked their economic assessment – more upbeat on job gains and household spending – however conceded to sluggish core inflation as now definitively “below 2%”, compared to “somewhat below 2%” in prior statements.


  • U.S. existing home sales slipped 1.8% in June to a four-month low. Single-family sales declined 2%, while condos were unchanged during the month. Still, the six- and 12-month averages edged up to their highest levels since August 2007. Total housing inventory is down 7.1% from a year ago, which continues to add pressure to existing home prices, now 6.5% higher year-over-year. New home sales, also reported, advanced 0.8% in June and are now 9.1% higher from a year earlier.
  • The Eurozone Manufacturing PMI fell to a three-month low of 56.8, though continues to lead major global markets and remains firmly within expansionary territory. Within the region, France manufacturing PMI grew at the fastest pace in six years to 55.4. Japan activity fell to an eight-month low of 52.2. The U.S., which has slumped of late, recorded its first increase in six months with a 1.2 point advance to 53.2.

What’s to Come


  • Canada and the U.S. will report July’s jobs data on Friday along with an update on unemployment rates. The eurozone reports July’s inflation and GDP for the second quarter during the week. Manufacturing PMIs will also be reported for several countries, including Canada, the U.S. and China.

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Written by

Portfolio Specialist Group

AGF Investments Inc.

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