From the Desk of Irwin Michael – August 7, 2015

Today, the U.S. Bureau of Labor Statistics released the July 2015 U.S. non-farm payroll employment numbers of 215,000 new jobs and an unchanged unemployment rate of 5.3%. Interestingly, the Bureau announced that the job gains occurred primarily in the retail trade, healthcare, professional and technical services and financial activities. Additionally, the release of the U.S. ISM non-manufacturing index of 60.3, the highest level in about 10 years, indicates that the consumer sector is reaccelerating and could portend even greater strength to year end.

As a result of these statistical releases we have drawn the following conclusions:

  1. The initial U.S. Federal Reserve interest rate increase should occur within the September-December 2015 period;
  2. The American consumer should benefit from rising employment, subdued inflation and steady economic growth;
  3. The U.S. economy continues to improve from the winter weakness. While this improvement is not excessive we could see this steady growth elongate the economic cycle through 2017;
  4. Given an improving U.S. economy and the fact that Canada is an important marginal supplier of goods and services to the United States we believe that combined with a low 76¢ Canadian dollar, the Canadian economy should start to improve with greater U.S. exports, merger and acquisition activities, etc.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

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