Around the World – Week of July 4th Update

Author: Portfolio Specialist Group

July 4, 2017

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

Weekly Market Review


  • The Canadian economy grew 0.2% in April marking the sixth straight month of expansion. Annualized growth improved to 3.3%, making Canada the leading industrialized global economy this year.
  • 14 of 20 sectors grew in April, with services-producing industries advancing 0.3%, while goods sectors were largely unchanged. Interestingly, the small arts, entertainment and recreation category had its strongest month in two years with a 2.8% advance, coinciding with a month where five Canadian teams were in the NHL playoffs, offering a nice boost to headline GDP.
  • This continued growth strengthens odds of a Bank of Canada rate hike at next week’s meeting. Markets have now priced in over an 80% chance for a 25 basis points increase.


  • The final reading of first quarter GDP showed the U.S. economy slowed far less than initially feared. Growth was upwardly revised to 1.4% in the quarter, up from the prior report of 1.2% and double the initial estimate of 0.7%.
  • An increase in consumer spending, which accounts for more than 60% of U.S. economic activity, as well as a jump in exports, supported the upward revision.
  • Also reported this week, U.S. durable goods orders slid 1.1% in May, lowering annualized growth to 3.3%. The decline was largely due to transportation equipment, which fell 3.4%


  • Eurozone inflation continued to drift further away from the European Central Bank’s (ECB) target with June’s CPI measuring 1.3%. Energy prices, which were up only 1.9% year over year, caused most of the decline.
  • Positively, core inflation, which excludes energy prices, rose 1.1% in June, from 0.9% in the prior month.
  • Prior to the report, ECB President Mario Draghi hinted at policy tightening, suggesting “firming and broadening” recovery, before softening his remarks later in the week.


  • Japanese inflation rose for a fifth straight month in May to 0.4% on an annualized basis. Still, a decline in oil prices and slow wage growth have kept prices well below the Bank of Japan’s 2% target. Retail sales also missed expectations, rising an annualized 2.0%, down from April’s 3.2%. Japanese unemployment rose in May to a seasonally adjusted 3.1%, from 2.8% previously.
  • China continues to defy expectations for a slowdown, reporting June’s manufacturing PMI of 51.7, advancing from 51.2 in the prior month. The world’s second largest economy saw improvement in a number of leading indicators, including new orders and production. Also reported, the non-manufacturing PMI rose to 54.9, the second highest level since May 2014.

What’s to come


  • Canada and the U.S. will report employment data on Friday. The U.S. is expecting a rebound after last month’s disappointing jobs print. The eurozone will also release May’s unemployment rate and retail sales. Manufacturing PMI updates will be reported across several global markets throughout the week.

Written by

Portfolio Specialist Group

AGF Investments Inc.

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