US & Canada

The US Q2 2009 GDP declined at a less-than-expected 1.0% q/q annualized rate after a downwardly revised 6.4% q/q contraction in Q1, according to advance Q2 GDP data released by the Commerce Department. The Q2 GDP shrank 3.9% y/y, the largest drop for any year in the post-WWII era. The largest negative drags on the Q2 GDP were business investment, personal consumption, home building, and inventories. The Q2 personal consumption declined at a more-than-expected 1.2% q/q annualized pace after Q1's 0.6% q/q increase. The strongest components of the Q2 GDP were international trade, which added 1.4 percentage points to the GDP growth rate, and government spending, which added 1.1 points. The GDP price index was up at a 0.2% q/q annualized rate in Q2, up 1.5% y/y.

US employment costs rose a slightly more-than-expected 0.4% q/q in Q2 2009 after a record-low 0.3% q/q increase in Q1, according to a Labor Department report.

The Chicago business barometer increased to 43.4 in July, slightly more than our forecast and the highest reading since September 2008, from 39.9 in June, indicating the rate of contraction in business activity slowed this month, according to the Chicago Report by Kingsbury International, Ltd. and the Institute for Supply Management – Chicago, Inc. The production index increased to 43.3 in July from 39.3 in June; the new orders index rose to 48.0 from June's 41.6; the employment rate of decline slowed; the inventories index was at 25.4, the lowest reading since mid-1949; and the price paid and order backlog indexes declined, according to the Chicago report.

Canada's GDP fell a more-than-expected 0.5% m/m in May, a tenth consecutive month-on-month contraction, after a downwardly revised 0.2% m/m decline in April, data from Statistics Canada showed. The GDP dropped 3.5% y/y in May, the largest contraction since October 1982.