North America’s economic recovery continues at a slow pace

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For the first month since March, more than 100,000 jobs were added to the United States’ economy in July, according to the BLS’ most recent “The Employment Situation” report, which was published on August 4th. A majority of economists were quite pleased – and surprised – by the findings, as many had projected the economy would generate approximately 90,000 jobs last month. Nevertheless, the report’s findings were not entirely positive as the national unemployment rate rose on a month-to-month basis for just the second time in 2012, climbing from 8.2 to 8.3 percent, a five-month high.

During the first week of August, Canada’s latest employment figures and Mexico’s inflation statistics, concerning the month of July, were released as well, leading global economists to wonder – was Canada’s employment situation positive or negative in July? Did Mexico’s consumer prices rise or fall last month? And, were there any signs that economic progress is steadily occurring?

After a decline in June, Canada’s Ivey Purchasing Managers’ Index rose in July, climbing from 55.3 to 58.8 on a not seasonally adjusted basis. In spite of the increase, July’s index was the third lowest recorded in 2012, nearly six points higher than April’s yearly low of 52.7. While economists would prefer a much higher index, any figure above 50 indicates that economic growth occurred, as a majority of firms reported higher purchases in July than in June. Although the main index increased in July, three of its sub-indexes actually declined from June to July, including employment, suppliers, and prices, which fell to 55.3, 48.6, and 62.2, respectively. One sub-index – inventories – did augment for the second straight month, however, rising from 54.8 to 55.9.

Despite the rise in purchases, Canada’s employment situation did not improve in July. In fact, total employment declined by roughly 30,400 from June to July, as the national unemployment rate rose from 7.2 to 7.3 percent. According to Statistics Canada, 18.9 million Canadians were members of the labor force in July, an increase of 0.9 percent in comparison to July 2011’s data. 14.2 million residents were employed on a full-time basis, while another 3.2 million were working part-time. Most of the nation’s hiring occurred in sectors like finance, information, insurance, and real estate, while sectors such as retail trade, technical services, and public administration reported job losses in July.

Mexico’s Consumer Price Index (CPI) increased on a monthly basis for the second successive month in July, rising from 104.4 to 105. According to the National Institute of Statistics and Geography, domestic consumer prices were 4.4 percent higher last month than they were in July 2011; since January, annual inflation has risen by 3.4 to 4.4 percent. Total underlying inflation also upturned in July, surging to 106, while underlying inflation – goods and underlying inflation – services rose to 107.5 and 104.7, an annual increase of 4.9 and 3.1 percent, respectively.

However, for the 37th straight month, the Banco de Mexico’s nominal funding rate remained unchanged, at 4.5 percent, during the board of governors’ fifth meeting of 2012. Yet, as consumer prices continue to rise on a regular basis, some economists believe the bank’s board of governors will vote to lower the rate this fall or winter so that it is closer to the bank’s neutral nominal rate of 2.5 percent. The nation’s annual inflation rate is currently 4.4 percent, 1.4 percent higher than the Banco de Mexico’s target.

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