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HIGHLIGHTS OF THE WEEK
United States
United States
- The U.S. job machine slowed in May (+138k jobs) as the unemployment fell to a sixteen year low of 4.3%. A pullback in the participation rate contributed to the fall in the unemployment rate.
- The Federal Reserve's preferred measure of price growth slowed in April to 1.7% (from 1.9%), while the core measure fell to 1.5% (from 1.6%).
- Weak inflation will probably not forestall a rate hike in June, but continued weakness could be enough to delay further rate hikes. Just as much as job growth, this is an important metric to watch for guidance on future Fed action.
- Canadian real GDP rose 3.7% annualized in Q1, while nominal GDP rose 8.3%, marking the best threequarter streak in almost seven years.
- The household sector has contributed most to growth, due in large part to a hot housing market. Still, exports appear to be gaining momentum heading into the second quarter of the year.
- Preliminary data showed policy-induced soft market conditions in the GTA and GVA extended into May, bringing the durability of Canada's growth prospects into question.
- Low interest rates will likely continue to support consumption amid a cool down in activity in Canada's largest housing markets, providing upside potential to our 2017 growth forecast. Higher interest rates in 2018 should bring about a cooling in consumption and real estate.
