What to look for in economic data this week

Economic data is expected this week for Canadian GDP for August (Wednesday) and October employment (Friday).

CIBC is forecasting that Canada’s GDP grew by 0.1% in August, after rising by 0.2% in July.

“The August GDP reading will be closely watched for signs of whether or not the data-dependent central bank will be able to hike rates again in December,” says CIBC’s Royce Mendes in the bank’s week ahead report.

Manufacturing is expected to have added to growth, “in line with the build-up in inventory reported in recent monthly reports on the sector,” National Bank says in its weekly report.

Retail sales will likely have been a drag on growth, CIBC says. National Bank is also expecting a decline in housing starts to slow down growth. All told, National Bank is calling for a stagnant August GDP reading of 0%.

A slight increase in growth means GDP would track just above 2% in Q3, “not exactly blasting ahead,” CIBC says. The bank is sticking to its forecast that the Bank of Canada will raise interest rates once more, in January, to keep the economy from overheating for the next couple of years.

October employment data

Canada’s latest labour force survey will be released Friday. National Bank is forecasting that 5,000 jobs were created in October after an outsized gain in September. The bank is expecting the unemployment rate to stay at 5.9%, the same as in September.

A total of 53,700 jobs will have been created so far this year, the worst showing for the first 10 months of the year since the recession, National Bank says. It forecasts more job growth in the upcoming months with economic data still positive and some uncertainty related to trade diminished with the USMCA agreement.

In the U.S., CIBC is expecting 231,000 jobs to have been created in October, compared with 134,000 jobs in the previous month. Slowdown in hiring was partly because of hurricane Florence, the bank says. The unemployment rate is forecasted to stay at 3.7%.

CIBC is forecasting a modest 0.1% rise in U.S. wages after September’s wage increase, which was likely inflated by excluding lower-paying jobs affected by weather.

“Base effects should still lead annual wage growth to 3% for the first time since the recession,” CIBC says.

Read the CIBC report here and the National Bank report here.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.