United States — Sustained growth

  • Q3 growth slowed to 2.0% mostly due to inventory drag. Q4 looks like more of the same. Private sector domestic demand stronger than overall GDP growth. Home sales, permits near 8-year high. Unemployment claims near 40-year low. Consumer incomes and spending as well as capex growing. Mfg. softer on inventory correction. Leading indicators, confidence point to sustained domestic growth.

Canada — In transition

  • Q3 was the first quarter of positive growth in 2015. House construction firm, business capex (mostly energy) and government weak. Consumer attitude restrained by resource sector weakness/job loss.
  • Mfg. sales ex-petroleum products growing consistently, led by autos. Energy capex plans down sharply. Loonie weakness helping services, tourism, and now some mfg.

Eurozone — Strengthening

  • Q3 was 10th successive quarter of positive growth. Spain reported a solid Q3, its 10th positive result running. France improved, Italy strengthening. Private sector lending up solidly year over year after ending a 3-yr. decline last Oct.
  • PMIs strengthened in Dec. implying good Q4 GDP result. Driven by domestic demand and growing industrial production. Refugee crisis, fractious politics could weigh on consumer sentiment.

United Kingdom — Growing

  • Q3 GDP growth rate eased to up 2.3% y/y. Led by large services sector, trade. Construction, industrial production weaker. Oil sector subtracted from growth. Employment and income growth strong. PMIs and new orders positive but off best levels.
  • Growth pace sustainable for 2016, but uncertainty around EU membership referendum may weigh on business investment/confidence.

China — Slowing

  • Q3 GDP at 6.9% close to official full-year target, but internals are mixed/weaker. Fixed asset investment slowing, as is loan growth. Mfg. PMI slipped back into contraction territory, exports stagnant. Services growth undiminished. Employment, wages, retail sales all growing.
  • Government has cut rates six times, more could come. House prices higher year over year.

Japan — Conflicted

  • GDP growth rebounded back into positive territory in Q3. Leading indicators and new orders both stronger. PMIs, corporate earnings, and business confidence firm.
  • Employment, wages growing, consumer confident, spending stagnant. Weak oil prices putting inflation targets in jeopardy.

Source - RBC Investment Strategy Committee, RBC Capital Markets, GPAC

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