We’re going to know a lot more about the state of the Canadian and U.S. recoveries at the end of this week. Three key reports are scheduled for release in the next few days. Here’s what to look for.
1. Canadian economic growth
A report is due today on the country’s real gross domestic product (GDP) growth for the month of February. Real GDP growth measures economic output, adjusted for inflation (or deflation, as the case may be). It’s the number most often referred to when discussing an economy’s performance. In January, the Canadian economy produced real month-over-month GDP growth of just 0.1%. The consensus among economists is that we’ll see 0.2% month-over-month growth for February. Both numbers are well short of the Bank of Canada’s forecast of 2.5% real GDP growth this year, but it’s too early to worry. Growth is expected to pick up in the months ahead. (Update: The GDP report showed a decline of 0.2% in February.)
2. U.S. manufacturing activity
On Tuesday, we see the first of two important U.S. reports. The Institute for Supply Management (ISM) Manufacturing Index tells us how much manufacturing is going on across the country, which is of course a key indicator of economic activity. When consumer spending drops, manufacturers are left with excess inventory. So they stop producing their goods. A rise in the index indicates that actual product manufacturing is occurring. That not only signals confidence on the part of manufacturers, it also represents actual economic activity (i.e., spending on the part of the manufacturing companies on raw materials and labour). The index was at 53.4 in March, and is expected to come in lower, at 53 for April. That month-to-month change is less important than the fact that the ISM Manufacturing Index is now reporting three years of continual growth for U.S. manufacturing. That’s huge. According to a report from TD Economics, this “continues to be one of the bright spots for the economic recovery. And with the new orders to inventory spread (a proxy for future production activity) expected to remain in positive territory for the seventh consecutive month, the outlook for the sector remains favourable.” (Update: The ISM Manufacturing Index hit 54.8 in April.)
3. U.S. jobs report
Watch for the U.S. Nonfarm Payrolls report from the U.S. Department of Labor on Friday. This covers companies in the manufacturing, construction and other goods-producing industries. The report tells us how many non-farm jobs have been added or lost during the month. The consensus forecast is that 165,000 jobs will be added, and that the U.S. unemployment rate will remain at 8.2%. That compares well to the 120,000 jobs added in March. (Update: The U.S. economy added 115,000 jobs in April. That moves the unemployment rate down to 8.1%.)
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