Canada – Manufacturing shipments rose 0.4% in March, surprising consensus which was looking for a 0.3% decline. Eleven of the 21 industries posted higher sales, including machinery (+3.3%), plastics (+2.7%), food manufacturing (+2.1%), chemicals (+1.2%). Those dwarfed sales declines in several other categories including petroleum and coal products. In real terms, factory sales rose 0.5% while inventories were up 0.1%. The volume gains for both shipments and inventories suggest a contribution to March GDP by the manufacturing sector.
The Teranet–National Bank House Price Index rose 0.5% in April, following a flat March. Prices were up in most of the eleven metropolitan regions covered, with only Quebec city and Victoria seeing monthly declines. On a year-on-year basis, home prices were up 4.9% nationally, but with contrasting fortunes across cities. Calgary led the pack with a 10.0% yearon- year increase, followed by Vancouver (+9.0%), Toronto (+5.8%), Hamilton (+5.3%), Edmonton (+4.0%) and Winnipeg (+2.5%), while the rest were in deflation mode: Halifax (-3.5%), Quebec City (-2.4%), Victoria (-0.7%), Montreal (-0.4%), Ottawa-Gatineau (-0.4%).
International securities transactions data showed foreign investors reducing their holdings of Canadian securities by C$1.2 bn in March, with net selling in money market instruments (-C$6.1 bn) more than offsetting net buying in equities/investment funds (+C$3 bn) and bonds (+C$1.8 bn). The increase in bond holdings was mostly in corporates (+C$3.4 bn, despite the C$1.8 bn divestment from government enterprises), which more than offset divestment from federal
government bonds (-C$1.4 bn), and provis (-C$0.3 bn). Looking at Q1 as a whole, net portfolio inflows amounted to C$6.1 bn, as increased holdings of equities/investment funds (+C$7.6 bn), corporate bonds (+C$7.2 bn, of which C$4.5 bn in government enterprises), provis (+C$0.9 bn), and munis (+C$0.4 bn), more than offset the net divestment from federal government bonds (-C$4.9 bn) and money market instruments (-C$5.2 bn).
United States – Retail sales rose 0.1% in April, weaker than the 0.4% print expected by consensus. However, the prior month was revised up sharply to +1.5% (from +1.1%). Sales of motor vehicles/parts rose 0.6%. Excluding autos, sales were flat, also weaker than consensus which was at +0.6%, although here too, the prior month was revised up from +0.7% to +1%. Ex-auto sales were supported by gains for sellers of gasoline, food/beverage, building materials, health/personal care products, clothing, sporting goods, and general merchandise which exactly offset declines in sales of furniture, electronics and miscellaneous stores. The small increase in overall April sales should be looked at in context, given that it comes after a huge increase in March. The latter represents an excellent handoff to the current quarter and hence puts Q2 in a solid position.
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