Quebec economy: leading indicators keep sending positive signals

The Desjardins Leading Index keeps sending encouraging signals for Quebec's short term economic outlook. The DLI has increased significantly for five months in a row, according to data published December 12 on the web site of Desjardins.


https://www.desjardins.com/ressources/pdf/ipd1216e.pdf

World economy, recent signs of improvement

The most recent monthly leading economic indicators from the OECD, published December 8, and the most recent IHS Markit PMI survey results, published December 5, let believe that the world economy expansion is showing signs of faster growth actually and for the months to come.

OECD press release:
http://www.oecd.org/std/leading-indicators/CLI-Dec16.pdf

IHS Markit press release:
https://www.markiteconomics.com/Survey/PressRelease.mvc/bcfa94c6e5454851895418920b6c87d9

The US economy is doing quite well these days

On November 29, the Bureau of Economic Analysis indicated that the american economy grew by 0.8% (3.2% annualised) in the third quarter, its best performance since the summer of 2014.

IHS Markit most recent PMI surveys show that the economy is growing at a similar rate in October and November.

Leading economic indicators from the Conference Board and the OECD let believe that growth will go from modest to moderate in the coming months.

For people looking for a «Trump» impact, just wait a few more months to see it in economic data, except obviously for the financial markets (equity, bonds) which reacted immediately after the November 8 elections and where data are rapidly available.

The world economy improved in October, according to PMI from IHS Markit

The world economy showed signs of better growth in October according to the most recent results from purchasing managers surveys (PMI) published by IHS Markit November 4. New orders data let believe that growth will continue to improve in November.

https://www.markiteconomics.com/Survey/PressRelease.mvc/dffc698018984829af58ec503a114e9d

The US economy improves in October, according to PMI

PMI results published October 26 by IHS Markit  show that the american economy started the fourth quarter at a good pace of growth.

https://www.markiteconomics.com/Survey/PressRelease.mvc/ff0a88d04891402fa6ce739c8b1b2db2

Better days to come for Quebec's economy, according to the DLI

Quebec's economy pace of growth might improve in the coming months based on the recent evolution of the Desjardins Leading Index for which data were published October 13.

World economy: modest growth, according to the IMF

The International Monetary Fund (IMF) published, October 4, its most recent World Economic Outlook. 2016, like 2015, will show a modest growth of the world economy. But, things might improve slightly in 2017.

http://www.imf.org/external/pubs/ft/weo/2016/02/index.htm

United States economy: at best, moderate growth in the coming months

Many forecasters believe that the pace of economic growth will accelerate in the United States in the coming months. But, the monthly and semestrial evolution of the leading economic indicators from the Conference Board signal, at best, a moderate growth.

Link to the September 22 press release from the Conference Board:
https://www.conference-board.org/data/bcicountry.cfm?cid=1

Canadian economy: scenario of moderate growth in the coming months

In its September 7 press release, the Bank of Canada indicated that:

"While Canada’s economy shrank in the second quarter, the Bank still projects a substantial rebound in the second half of this year."

What can we read about the canadian outlook from the leading economic indicators?

Leading indicators from the Macdonald-Laurier Institute, the Conference Board of Canada and the OECD all show that economic conditions will improve in the coming months.

Here is the graph from the September 8 OECD press release:

World economy: slow growth last August

The most recent PMI surveys from Markit Economics show that the world economy keeps expanding, but at a very slow pace. On the positive side, production and new orders growth improved slightly in August.

Link to Markit Economics September 5 press release:
https://www.markiteconomics.com/Survey/PressRelease.mvc/a99df28cccfa40b5b144152ba58ed899

GDP growth in the US for the second quarter of 2016

The Bureau of Economic Analysis will publish July 29 its first estimate of economic growth in the United States during the second quarter of this year. July 15, the New York Fed and the Atlanta Fed  calculate it respectively at 2.2%  and 2.4% (annualised rate), taking into account the most recent data published. GDP growth in the first quarter was estimated, at the end of June, at 1.1% (annualised rate) by the BEA.

Slow growth in Québec actually and in the coming months

The quasi-stagnation of the Desjardins Leading Index continues, according to the most recent analysis published July 14. That means that Quebec's economy grows slowly actually and will continue to grow at that pace in the coming months.


https://www.desjardins.com/ressources/pdf/ipd0716e.pdf?resVer=1464875179000

Modest growth of the US economy for the time being

Three indicators published today, June 23, show that the american economy growth is not vigorous actually and that it will continue like that in the coming months.

The Chicago Fed National Activity Index indicates that growth was below trend in May.

https://www.chicagofed.org/publications/cfnai/index

Markit Economics monthly survey of purchasing managers in the manufacturing industry shows that the activity improved lightly in June but remains subdued.

https://www.markiteconomics.com/Survey//PressRelease.mvc/c7420a52858b4686ae89aa398eafd8ba

The monthly and semestrial evolution of the Conference Board leading economic index point to modest growth in the coming months.

https://www.conference-board.org/data/bcicountry.cfm?cid=1

Slow growth in Québec, according to the Desjardins Leading Index

The Québec economy will continue to grow in the coming months, but at a weak pace; this is, at least, what we can read from the evolution of the DLI in the recent months.

The most recent data on the DLI were published June 14 on the Desjardins website.


https://www.desjardins.com/ressources/pdf/ipd0616e.pdf?resVer=1464875179000

World economy: its growth is still sluggish, according to PMI data

Symptoms of weak growth in the world economy keep showing in PMI data published June 3 on Markit Economics website.

https://www.markiteconomics.com/Survey//PressRelease.mvc/7dbf0ebff0284f2688cd91765242ce6e

Slow growth in Québec in the coming months, according to the DLI

The evolution of the Desjardins Leading Index (DLI) in the first quarter of this year lets believe that economic growth is actually weak  in Québec, and the outlook for the coming months is also of a slow growth. The DLI stabilised in February and March, after having dimished in January.

Link to the Desjardins analysis:
https://www.desjardins.com/ressources/pdf/ipd0516e.pdf?resVer=1454595388000

Downturn in the canadian construction industry in 2016

Recent data on three indicators point to a downturn in the canadian construction industry activity this year:

- Capital expenditures,

- Housing starts,

- Building permits value.

Capital expenditures (intentions for 2016), published by Statistics Canada May 10

 Housing starts, published by CMHC May 9

Building permits value, published May 5 by Statistics Canada

 

World economy: stable, but slow, growth, according to OECD leading indicators

The most recent OECD monthly leading indicators point to "stable growth", but at a low level in the coming months, notably in its member countries taken as a whole. The outlook is stabilising or improving somewhat in the main emerging economies.

OECD May 11 press release available at:
http://www.oecd.org/std/leading-indicators/compositeleadingindicatorsclioecdmay2016.htm

World economy: slow pace of expansion in April, according to PMI

The world economy kept expanding in April, but at a very slow pace, according to the JP Morgan Global Manufacturing & Services PMI published May 6 on Markit Economics website.

https://www.markiteconomics.com/Survey//PressRelease.mvc/f8c5a6a511ad4db8b82320e434c9799a

The IMF revises downward its growth projections for 2016

The International Monetary Fund published, April 12, its most recent edition of the World Economic Outlook (WEO). Without surprise, its economists revised downward their estimate of world real GDP growth for this year. Most countries and group of countries see a lower growth projection compared to last January. There are few exceptions; among them, China and Emerging and Developing Europe.

The most recent edition of the WEO is available at:
http://www.imf.org/external/pubs/ft/weo/2016/01/

Here is the summary table of the projections:

Slow growth of the world economy in the first quarter

The world economy grew in the first quarter of 2016, but at a very slow pace. This is what we can read from the Markit Economics press release of April 5 on the JP Morgan Global Manufacturing & Services PMI. The "new orders" subindex (see below) points to the same direction in the short term.

Link to Markit Economics April 5 press release:
https://www.markiteconomics.com/Survey//PressRelease.mvc/dcaf0a9b1dc54693831a9e30c1562cfb

A graph published in the March 19 edition of The Economist shows that the world economy slow growth trend has been going on for quite a while.

It will be interesting to see what the IMF will project for 2016 as a whole when it publishes its April edition of the World Economic Outlook. A downgrade of its January forecast is quite possible.

Is the world economy stagnating in early 2016?

The world economy is stagnating or growing very weakly in early 2016. This is what it looks like based on the recent evolution of the JP Morgan Global Manufacturing & Services PMI, published March 3 by Markit Economics.

Details at:
https://www.markiteconomics.com/Survey//PressRelease.mvc/fae12ed799474198b4047027ab72793a

Slow growth in Québec actually and in the coming months

The Institut de la statistique du Québec indicated January 21 that the Québec economy grew by only 1.1% in the first ten months of 2015 compared to the same period in 2014. It seems that growth is even less than that these days and it will stay slow in the coming months, based on the recent evolution of the Desjardins Leading Index published February 11.


Details at: https://www.desjardins.com/ressources/pdf/ipd0216e.pdf?resVer=1455201438000

Stay cautious

The Globe and Mail published February 6 (page F2) a summary of an interview between Stephen Roach, former chief economist at Morgan Stanley's, and Rudyard Griffiths. Here is the last part of the compte rendu

"What advice do you have?

These are difficult, treacherous times, and financial markets are displaying an extraordinary amount of volatility. I think a prudent strategy is to stay very cautious and not take an awful lot of risk in your individual portfolios until there’s a clearer sense of where the underlying economic fundamentals are heading, and what, if anything, central banks are going to do."

Slow growth of the world and american economies in January, according to PMI surveys

Purchasing Managers surveys published by Markit Economics show that the world and the United States economies grew in January, but at a weak pace. The surveys results are published at:

https://www.markiteconomics.com/public

Here are graphs that show some results of the surveys:

World economy

 

USA economy

Manufacturing activity in Canada

Canadian economy: are the growth projections for 2016 realistics?

The Bank of Canada writes in its January edition of the "Monetary Policy Report"  "...that, to date, the adjustments mean that near-term potential outpout growth is likely in the lower part of the range of estimates provided in the April 2015 Report." (page 29). The lower limit of these estimates for 2016 was at 1.4% last April. The January Report also signals that "...the degree of slack in the economy has been increasing" (page 18).

 

Now, the question is: in these circumstances, can the Bank projection of a 1.4% real GDP growth this year stand? Isn't it too optimistic?   


Many leading indicators of the canadian economy evolution let believe that there could be a downturn in the coming months (see the graphs below). Moreover, the federal government economic stimulus plan is still to come, and an important part of it, the infrastructure investment program, when announced, will take many months before having an impact , because of normal delays for the approval and the beginning of the construction of specific projects.

 

Be it the real GDP growth forecast for 2016 of the Bank (1.4%), of the IMF (1.7%) or The Economist review pool of forecasters (range of 1.2% to 2.3%), don't be surprised if they are revised downward in the coming months.  Even an economic activity contraction is quite possible, at least in the first two quarters of this year.

 

Some leading indicators of the canadian economy evolution

 

Building permits (source: Statistics Canada)

 

 

 Housing starts (source: CHMC)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity prices (source: Bank of Canada)

 

Unfilled manufacturing orders (source: Statistics Canada)

 

Stock Market: S&P/TSX (source: The Globe and Mail)
      

Clouds are gathering over the US economy, according to leading indicators

The prospects for modest to moderate growth in Canada in 2016 are partly based on the performance of the United States economy. But growth there might not be as strong as expected when we look at its leading indicators.

OECD index of leading indicators (January 11):

Semestrial evolution of the Conference Board Economic Leading Index (January 22)

Weekly leading indicators index from the Economic Cycle Research Institute (January 22)

World GDP growth revised downward by the IMF

The International Monetary Fund (IMF) published January 19 its World Economic Outlook Update. The world output was revised downward for 2016 (3.4%), and it should be lower than the trend recorded in the last years (around 4.0%). Canada's GDP growth this year is estimated at 1.7% by the IMF economists; this appears quite optimistic, if not irrealist. The IMF WEO Update is available at:

http://www.imf.org/external/pubs/ft/weo/2016/update/01/pdf/0116.pdf

Here is an overview of the Update:

Modest growth of the world economy, according to PMI data

World economic expansion is quite modest these days based on the J.P. Morgan Global Manufacturing & Services PMI  recent evolution. The most recent data on PMIs were published January 6 by Markit Economics. Moreover, the increase in new orders was weak, which means the recent trend in economic activity will continue at least in the short term.

Details at:
https://www.markiteconomics.com/Survey//PressRelease.mvc/2ee3e5a6d71a44be98fe13307fc49cd5