Canadian GDP flat in July, though August data points to reacceleration
Canada’s real Gross Domestic Product (GDP) was unchanged in July, following three consecutive months of growth, with output increasing in 10 of 20 industrial sectors and annual growth coming in at 1.4% year over year. Statistics Canada’s flash estimate points to a 0.2% gain in August, driven primarily by mining and quarrying, partially offset by weaker oil and gas extraction. Combining the two months, third quarter growth is tracking at roughly 2.0% annualized, below the second quarter’s 3.8% pace but still consistent with continued expansion.
Why this matters: While growth is moderating from the stronger pace seen earlier in the year, the current tracking still points to a healthy rate of expansion that may help ease concerns around a slowdown amid elevated energy prices and ongoing trade disruptions. The data reinforces a picture of steady, sustainable economic activity heading into the fourth quarter.
U.S. hiring slows sharply in September as inflation eases
U.S. employers added 29,000 jobs in September, well short of the 90,000 expected, with July and August payrolls revised down by a combined 60,000. The unemployment rate edged up to 4.2% from 4.1% in August and wage growth slowed to 3% year over year, though layoffs remained limited. Inflation also came in softer, with the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s (Fed) preferred inflation gauge, rising 3.4% year over year in August, below expectations of 3.7%. Core PCE, which excludes food and energy, eased to 3.0% from 3.3% in July, also below expectations.
Why this matters: Weaker hiring, downward revisions, and a rising unemployment rate point to a labour market that is losing momentum, which may leave less room for the Fed to keep tightening. At the same time, softer-than-expected PCE readings suggest price pressures are easing, reducing the need for further rate increases to bring inflation back to target. Following both reports, market expectations for a rate hike at the Fed’s October meeting have eased.
| Index† | Change (%) | Index Level | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| Treasury Bill | 0.05 | 0.03 | 1.69 | 2.30 | 194 |
| Canadian Bonds | -0.29 | 0.22 | -0.56 | -0.82 | 1,193 |
| Canadian Equities | -0.75 | 0.76 | 13.86 | 20.43 | 35,503 |
| U.S. Equities | -0.25 | 0.94 | 13.79 | 16.33 | 7,723 |
| International Equities | -1.48 | -0.96 | 9.84 | 14.36 | 3,095 |
| Emerging Market Equities | -1.34 | 0.24 | 23.81 | 27.68 | 1,709 |
| European Equities | -1.10 | -0.44 | 9.79 | 14.66 | 211 |
| Currencies† | Change (%) | Exchange rate | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| C$/US | -0.76 | -0.14 | -3.69 | -1.98 | 0.70 |
| C$/Euro | 0.45 | 0.56 | 0.52 | 2.03 | 0.62 |
| C$/Pound | -0.73 | 0.06 | -2.00 | -0.54 | 0.53 |
| Commodities (US$)† | Change (%) | Price | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| WTI Crude Oil ($/Barrel) | -1.41 | 0.76 | 60.07 | 52.00 | 91 |
| Gold ($/oz) | -3.68 | -0.58 | -7.45 | 3.29 | 4,162 |
Treasury Bill is represented by the FTSE Canada 60 Day T-Bill Index (C$), Canadian Bonds represented by the FTSE Canada Universe Bond Index (C$), Canadian Equities represented by the S&P/TSX Composite TR Index (C$), U.S. Equities represented by the S&P 500 TR Index (US$), International Equities represented by the MSCI EAFE GR Index (US$), Emerging Market Equities represented by the MSCI EM GR Index (US$), European Equities represented by the MSCI Europe Index (€). It is not possible to invest directly in an index. Assumes reinvestment of all income and no transaction costs or taxes.
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