Canada - The GDP grew 0.2% in January 2013, reversing the contraction registered in December 2012. The goods sector saw a 0.4% increase in output, with sharp gains in manufacturing (+1.2% after -1.9% the prior month) and mining (+0.2%) more than offsetting declines in agriculture utilities and construction. Service-sector output rose 0.2%, as a sharp 4.1% increase in the arts and entertainment segment (mostly thanks to the end of the labour conflict in professional hockey) added to gains in several other categories including retail wholesale and accommodation. Industrial production jumped 0.7% in line with the manufacturing rebound. The rebound in Canadian economic activity in January is positive, and should be followed by further expansion in February and March in response to increases in U.S. orders particularly for autos and parts. Canada is presently on course to post GDP growth of about 2% annualized in 2013Q1.
In February the consumer price index climbed 1.2% m/m versus consensus expectations for a 0.7% advance. This hoisted the y/y rate up seven ticks to a six-month high of 1.2%. In seasonally adjusted terms, the CPI rose 0.7% m/m. The core CPI which excludes eight of the most volatile items shot up 0.8%, thus lifting the y/y core rate five ticks higher to 1.4% its top level in six months. In seasonally adjusted terms core prices sprang 0.4%.
Inflation in Canada surprised on the upside in February. Though the surge in gasoline prices had been anticipated, core inflation was strong, recording its steepest monthly increase in 10 months. We do not believe a trend is in the making, as downward pressure is still being exerted on prices by a soft economy, a strong Canadian dollar and housing price deflation.
United States – The durables goods report showed orders soaring 5.7% in February easily topping consensus expectations. Adding to the good news was the upward revision from -5.2% to -3.8% for the prior month. February’s results then more than made up for January’s disappointing showing. The increase was fuelled by the transportation industry, which progressed 21.7% on thrust from aircraft (defence +7.6% and civilian +95.3%) and vehicles and parts (+3.8%). After growing 2.9% the month before (revised from +1.9%), orders excluding transportation were up a soft 0.5% just shy of the 0.6% expected by consensus. Non-defence capital goods orders excluding aircraft fell 2.7%, though this came on the heels of a sharp 6.7% increase the previous month. Total shipments of durable goods rose 1% on a 1.9% increase in non-defence capital goods excluding aircraft. Based on two months of data shipments of nondefence capital goods ex-aircraft, a proxy for investment is now tracking at +4.4% annualized in Q1 (+5.1% in Q4). This suggests investment spending will make a decent contribution to Q1 GDP growth which is heading for a print of about 3% annualized.
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In February the consumer price index climbed 1.2% m/m versus consensus expectations for a 0.7% advance. This hoisted the y/y rate up seven ticks to a six-month high of 1.2%. In seasonally adjusted terms, the CPI rose 0.7% m/m. The core CPI which excludes eight of the most volatile items shot up 0.8%, thus lifting the y/y core rate five ticks higher to 1.4% its top level in six months. In seasonally adjusted terms core prices sprang 0.4%.
Inflation in Canada surprised on the upside in February. Though the surge in gasoline prices had been anticipated, core inflation was strong, recording its steepest monthly increase in 10 months. We do not believe a trend is in the making, as downward pressure is still being exerted on prices by a soft economy, a strong Canadian dollar and housing price deflation.
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United States – The durables goods report showed orders soaring 5.7% in February easily topping consensus expectations. Adding to the good news was the upward revision from -5.2% to -3.8% for the prior month. February’s results then more than made up for January’s disappointing showing. The increase was fuelled by the transportation industry, which progressed 21.7% on thrust from aircraft (defence +7.6% and civilian +95.3%) and vehicles and parts (+3.8%). After growing 2.9% the month before (revised from +1.9%), orders excluding transportation were up a soft 0.5% just shy of the 0.6% expected by consensus. Non-defence capital goods orders excluding aircraft fell 2.7%, though this came on the heels of a sharp 6.7% increase the previous month. Total shipments of durable goods rose 1% on a 1.9% increase in non-defence capital goods excluding aircraft. Based on two months of data shipments of nondefence capital goods ex-aircraft, a proxy for investment is now tracking at +4.4% annualized in Q1 (+5.1% in Q4). This suggests investment spending will make a decent contribution to Q1 GDP growth which is heading for a print of about 3% annualized.
To Read the Entire Report Please Click on the pdf File Below.
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