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US inflation dynamics suggest policy is too accommodative

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					                                                                                                                                                                                                                           February 12, 2010

                                                                                                                                       U.S. inflation dynamics suggest
    •       Topic of the week.                                                                                                         policy is too accommodative
            This week, we take a look at inflation trends
            and why they will have a major impact on the                                                                               Summary
            timing of the Fed’s exit strategy. We examine
                                                                                                                                               •        Some forecasters believe the Fed could delay hiking
            why rates will need to rise sooner than later.
                                                                                                                                                        rates until 2012. We beg to differ.
            Inflation trends suggest that the current
            environment no longer warrants zero-percent                                                                                        •        The latest recession has been unusual compared with
            interest rates to allow the economy to grow                                                                                                 previous episodes. Several elements stand out: the
            and labour conditions to improve.                                                                                                           contraction in capacity, exceptionally stimulative interest
                                                                                                                                                        rate levels, quantitative easing, and massive fiscal
    •       Economic Indicators Review (p. 6)                                                                                                           stimulus at home and abroad. As a result, special
                                                                                                                                                        attention should be paid to inflation.
    •       Things to watch
            Economic calendar and significant earnings                                                                                         •        It is very surprising to note how buoyant core CPI has
            announcements of the week ahead (p. 7)                                                                                                      remained after 19 months of recession and with the
                                                                                                                                                        Congressional Budget Office’s output gap estimated at
    •       Economic tables (p. 8)                                                                                                                      -6%.
                                                                                                                                               •        In the past two recessions, import prices have been a
                                                                                                                                                        source of headline disinflation. However, unlike what
                                                                                                                                                        happened in the recovery period of 2002-2003, import
                                                                                                                                                        prices are rising steeply now.
                                                                                                                                               •        Core goods inflation, which had typically been viewed as
                                                                                                                                                        a source of disinflation in the past decade, has surged in
                                                                                                                                                        recent months and is leading the upturn in core CPI. This
                                                                                                                                                        stands in sharp contrast with the core goods inflation
                                                                                                                                                        trend observed after the 2001 recession.
                                                                                                                                               •        Though we do not expect inflation to escalate out of
                                                                                                                                                        control, it would be wise to be forward looking and keep
                                                                                                                                                        inflation expectations in check. The current environment
                                                                                                                                                        no longer warrants zero-percent interest rates to allow
                                                                                                                                                        the economy to grow and labour conditions to improve.
                                                                                                                                               •        We continue to expect the FOMC to begin normalizing
                                                                                                                                                        interest rates at its August 2010 meeting.




                                                                                           ECONOMY AND STRATEGY GROUP – 514.879.2529
                                                                                             Stéfane Marion, Chief Economist and Strategist
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National Bank Financial.
                                                                                                                                WEEKLY ECONOMIC LETTER
How long will Fed stay put?                                                                           Inflation conundrum explained
Some forecasters believe the Fed could delay hiking rates                                             Besides monetary policy, there are several other reasons
until 2012. We beg to differ.                                                                         for the current pattern in prices. First, let us look at the
                                                                                                      unusual relationship at present between core inflation and
Why anyone would expect the Fed to stay put so long is
                                                                                                      output gap (Chart 1). It was argued in last week’s
simple enough to understand. In the past, following its
                                                                                                      Economic Letter that the CBO was overstating its
dual mandate of price stability and full employment, the
                                                                                                      measure of the output gap as it failed to recognize any
Fed has hiked rates only after labour market conditions
                                                                                                      capacity destruction in the U.S. economy during the worst
improved significantly. Waiting thus for confirmation that
                                                                                                      recession since the 1930s. In our opinion, instead, it is
activity was back on track was not much of a problem as
                                                                                                      reasonable to assume some contraction in potential GDP,
inflation pressures normally remained subdued in the early
                                                                                                      especially in the light of a) the massive restructuring of the
phase of recovery. However, the latest recession is quite
                                                                                                      auto sector and b) the bursting of the housing bubble.
different from past episodes on several counts, including
the presence of a contraction in capacity, extraordinarily                                             2) Significant difference in gap between CBO and NBF
stimulative interest rate levels, quantitative easing, and                                             Output gap based on two different measures of potential GDP
massive fiscal stimulus at home and abroad. As a result,                                                        %
                                                                                                           1
the current policy stance is very particular and special
attention should be paid to inflation and the potential for                                                0

prices to accelerate faster than usual. There is no denying                                                -1

that we are not in a typical monetary policy environment.                                                  -2
                                                                                                                                                                              NBF gap
Having travelled far down the road of quantitative easing,                                                 -3
the Fed cannot risk falling behind the curve. This will call
                                                                                                           -4
for an early exit from zero-interest rates, especially as
                                                                                                           -5
inflation has held firm.
                                                                                                                                                          CBO gap
                                                                                                           -6
Output gap and inflation
                                                                                                           -7                      Shaded for U.S. recession

Looking at Chart 1, it is very surprising to note how                                                      -8
                                                                                                           06Q1      06Q3      07Q1      07Q3      08Q1        08Q3    09Q1       09Q3   10Q1
resilient both core CPI and core PCE have remained after
                                                                                                          NBF Economy and Strategy (data via Global Insight and CBO)
19 months of recession and an output gap of -6% as
measured by the Congressional Budget Office (CBO).                                                    While the CBO gauges the output gap at -6%, we believe
                                                                                                      the economy is only about -3% from potential. If the gap is
 1) Why is inflation so resilient if output gap is so big?                                            actually half what the CBO is reporting it to be, this would
 U.S. core PCE price deflator (%, y/y), core CPI (%, y/y) and CBO output gap
                                                                                                      have major implications for the mid-term inflation trend
          %
     5
                                          Core CPI                      PCE
                                                                                                      and the Fed’s stance on interest rates.
     4
     3                                                                                  CPI = 1.74%   Importance of inflation expectations
                                                                                        PCE = 1.73%
     2
     1                                                                                                Unlike many of the previous recessions and periods of
     0                                                                                                economic slack, business decisions reflect well-anchored
     -1
                                                                                                      inflation expectations in today’s environment. It is
     -2
     -3
                                                                                                      important for policymakers to keep these expectations
     -4                                                                                               from derailing in order to maintain price stability. As Chart
     -5                                                               CBO gap                         3 shows, inflation expectations for the next decade, as
     -6
                               Shaded for U.S. recessions
                                                                                                      implied by the swap market, remain in the range of 1.5%
     -7
     -8
                                                                                                      to 3.5%, which is where they have been since the mid-
          95   96   97   98   99   00    01    02    03     04   05    06     07   08   09            90s. Interestingly, however, inflation is expected to move
    NBF Economy and Strategy (data via Global Insight and CBO)                                        into the upper end of this band.
Most economists would have expected inflation to be
much less buoyant considering the events of the past two
years. Some are steadfast in the belief that inflation will
continue to slow in 2010. Our response to this is that, if
after 26 months (since onset of recession) inflation has
been this resistant, the Fed’s efforts to avoid disinflation
this cycle have worked splendidly.



                                                                                                                                                                                                2
                                                                                        February 12, 2010
                                                                                                                                       WEEKLY ECONOMIC LETTER
 3) U.S. headline inflation expected to trend up                                                          5) Import price inflation up steeply in second half of 2009
 All-items CPI inflation, actual and as implied by swap market                                            U.S. import price inflation excluding petroleum
                                                                                                                                                                                  Import prices now
             % (y/y)                                                                                                                                                              on rise, unlike after
    14                                                                                                                % (m/m)                                                       2001 recession
                                                                                                                1.2
    13                                                                       Future inflation
                                                                               implied by                       1.0
    12
                                                                              swap market                       0.8
    11
                                                                                                                0.6
    10
                                                                                                                0.4
     9
                                                                                                                0.2
     8
                                                                                                                0.0
     7                                                                                                         -0.2
     6                                                                                                         -0.4
     5                                                                                                         -0.6
     4                                                                                                         -0.8
     3                                                                                                         -1.0
     2                                                                                                         -1.2
     1                                                                                                         -1.4
     0                                                                                                         -1.6
           1980        1985      1990     1995     2000      2005        2010       2015                       -1.8
                                                                                                                     99       00     01    02      03       04       05     06   07     08       09
          NBF Economy and Strategy (data via Bloomberg)                                                         Shaded for U.S. recessions
                                                                                                                NBF Economy and Strategy (data via Global Insight)

Over the medium term, after the 2008 scare, inflation
expectations as derived from TIPS are already back to                                                     Robust import price inflation will have an impact on the
where they were at from 2004 to 2007 (Chart 4).                                                           core index, especially as we expect the greenback to lose
                                                                                                          considerable ground to the Asian currencies. Asia used to
  4) Expected inflation close to past decade highs                                                        be a source of deflation, but this is obviously no longer the
  Based on breakeven inflation rates of 5-year and 10-year TIPS
                                                                                                          case (Chart 6).
              %                                                                            Not far from
    3.0                                                                                    2004 peak
                                                                                             levels
    2.8                                                                                                   6) Deflationary pressures from Asia: no longer case
    2.6                                                                                                   U.S. import price inflation of Asian newly industrialized economies
    2.4
    2.2                                                                                                          8    % (q/q, annualized)

    2.0                                                                                                          6
    1.8                                                                                                          4
    1.6                                   52-week moving                                                         2
    1.4                                   average
                                                                                                                 0
    1.2                                                                                                         -2
    1.0                                                                                                         -4
                                                      Expected mid-term
    0.8                                               inflation in 5 years                                      -6
    0.6                                                                                                         -8
    0.4
      2000        2001    2002     2003   2004    2005     2006      2007    2008      2009                    -10

     NBF Economy and Strategy (data via Bloomberg)                                                             -12
                                                                                                               -14
                                                                                                               -16
Research shows that managing inflation expectations is
                                                                                                               -18
critical to keeping inflation in check. Given that the                                                                 99       00      01   02      03      04      05     06   07      08      09
                                                                                                                Shaded for U.S. recessions
market’s inflation expectations for the medium term are                                                         NBF Economy and Strategy (data via Global Insight)
back at a level consistent with price stability, it is crucial
that expectations not overflow on the upside because                                                      What is going on with goods CPI?
monetary policy is kept too loose for too long. This would
create a difficult environment for policymakers down the                                                  There are major developments emerging from the CPI
road.                                                                                                     data that cannot be overlooked. The core goods price
                                                                                                          index, which has typically been viewed as a source of
Import prices not contracting this cycle                                                                  disinflation in the past decade, surged in recent months
With the global economy more interdependent then ever                                                     and is leading the upturn in core CPI (Chart 7). This
before, imports are a key factor in the inflation equation. In                                            stands in sharp contrast with the trend after the 2001
the past two recessions, import prices have been a source                                                 recession. Part of the reason for this is the import price
of headline disinflation. However, unlike what happened in                                                environment, particularly if we consider the deflation over
the recovery period of 2002-2003, import price are rising                                                 the 2002-2004 period owing to cost benefits derived from
steeply now. A mere quarter after the end of the U.S.                                                     outsourcing. Admittedly, today’s dynamics are radically
recession, import price inflation excluding petroleum                                                     different.
sprang to 7.9% (q/q, SAAR) in 2009Q4.




                                                                                                                                                                                                          3
                                                                                            February 12, 2010
                                                                                                                                             WEEKLY ECONOMIC LETTER
7) Core CPI veering upward with core goods leading way                                                              9) Services inflation has troughed
U.S. core CPI and core goods CPI                                                                                    U.S. services CPI and services CPI excluding rent

     3.2 % (y/y)                                                                                                        6.5 % (y/y)
                                                                           Core CPI
     2.8
                                                                                                                        6.0
     2.4                                                                                                                                                          Services
                                                                                                                        5.5
     2.0                                                                                                                                                          ex. rent
     1.6                                                                                                                5.0
     1.2                                                                                                                4.5
     0.8                                                                                                                4.0
     0.4                                                     Core
                                                             goods                                                      3.5
     0.0
                                                                                                                        3.0
     -0.4
     -0.8
                                                                                                                        2.5
                                                                                                                                                           Services
     -1.2                                                                                                               2.0
     -1.6                                                                                                               1.5
     -2.0                                                                                                               1.0
     -2.4
                                                                                                                        0.5
     -2.8
             95       96    97    98   99    00    01   02     03         04   05     06     07   08   09               0.0
                                                                                                                             99       00      01     02     03       04      05   06   07   08   09
      Shaded for U.S. recessions                                                                                          Shaded for U.S. recessions
      NBF Economy and Strategy (data via Global Insight)                                                                  NBF Economy and Strategy (data via Global Insight)


In addition, the three largest components of the core                                                              Nevertheless, the tide is turning in the service sector as
goods index, namely, new and used vehicles (+5.5%),                                                                well. Services inflation excluding rent has begun to mount.
apparel (+1.9%), and medical care commodities (+3.3%),                                                             In the past, this has signalled a reversal of the services
are all outrunning core inflation (+1.7%) on a year-over-                                                          index.
year basis.
                                                                                                                   Putting current rates into perspective
 8) Restructuring of auto industry will have positive impact
 on prices                                                                                                         Clearly, the Fed did its part to support the economy
 U.S. new and used vehicle prices                                                                                  through the challenges of the financial crisis. This was
     6      % (y/y)                                                                   Largest increase in          accomplished by adopting extraordinary policy measures.
                                                                                        over a decade
     5                                                                                                             More specifically, it injected a massive amount of liquidity
     4                                                                                                             into the system by slashing interest rates to zero and
     3                                                                                                             enacting a significant amount of quantitative easing.
     2                                                                                                             However, the crisis is now over: Financial markets are
     1                                                                                                             running relatively smoothly again, economic activity is on
     0                                                                                                             the rebound and confidence has risen from the depths.
     -1                                                                                                            The question that begs asking, then, is whether current
     -2                                                                                                            interest rate levels are appropriate.
     -3
                                                                                                                   Chart 10 shows that real interest rates have dropped to
     -4
                                                                                                                   approximately -2%. However, as a result of quantitative
     -5
             99        00        01
          Shaded for U.S. recessions
                                        02        03    04           05        06       07        08    09         easing, there are immense reserves being held at the
          NBF Economy and Strategy (data via Global Insight)                                                       central bank. These, to our eyes, are like a ticking time
                                                                                                                   bomb. If tapped irresponsibly, they have the potential to
Where the auto sector is concerned, the unusual surge in                                                           explode prices. Consequently, we believe that the current
vehicle prices can be attributed to capacity reductions in                                                         monetary      policy  stance     will  become      overly
the U.S. auto industry. This is what is ultimately exerting                                                        accommodative in no time if the economy continues to
the upward pressure on prices.                                                                                     improve at this pace.
What about services CPI?                                                                                           In this regard, yellow flags have already begun popping up
                                                                                                                   in the inflation numbers. Even Thomas Hoenig, a voting
Services inflation, instead, remains well below its historical
                                                                                                                   member of the FOMC, suggested rates were too low by
range (Chart 9). This is not surprising, however, as rent
                                                                                                                   dissenting against the status quo at the latest committee
inflation, the largest component in the services index, has
                                                                                                                   meeting. In his view, “economic and financial conditions
experienced a significant slowdown in the past year. This
                                                                                                                   have changed sufficiently that the expectation of
is a common phenomenon for rent in periods of recession.
                                                                                                                   exceptionally low levels of the federal funds rate for an
However, this recession, which was triggered by the
                                                                                                                   extended period is no longer warranted”.
bursting of the housing bubble, has had a heavier impact
on rent than any previous one.



                                                                                                                                                                                                      4
                                                                                                       February 12, 2010
                                                                                                                      WEEKLY ECONOMIC LETTER
10) Zero-rate policy will need to be re-evaluated soon
                                                                                                      Conclusion
U.S. real Fed funds target rate (Fed funds target rate less core CPI)
                                                                                                      Though we do not expect inflation to escalate out of
     10
          % (y/y)                                                                                     control, it would be wise to be forward looking and keep
      8
                                                                                                      inflation expectations in check. The current environment
                                                                                                      no longer warrants zero-percent interest rates to allow the
      6
                                                                                                      economy to grow and labour conditions to improve. In our
      4
                                                                                                      opinion, inflation may surprise on the upside, especially as
      2                                                                                               the U.S. economy tones up through the first half of 2010,
      0                                                                                               revitalized by increased business investment and an
     -2                                                                                               improving labour market. We continue to expect the
     -4
                                                                     With quantitative                FOMC to begin normalizing interest rates at its meeting of
                                                                    easing factored in,
                                                                    monetary policy is                August 2010.
     -6                                                              more like having
                                                                     real rates at -5%.
     -8                                                                                               Marco Lettieri – Economist
                1975     1980       1985       1990        1995         2000    2005
      Shaded for U.S. recessions
      NBF Economy and Strategy (data via Global Insight)




                                                                                                                                                                 5
                                                                                          February 12, 2010
                                                                                                                   WEEKLY ECONOMIC LETTER
                                                     ECONOMIC INDICATORS REVIEW
                                                                                                                           by Paul-André Pinsonnault

Canada –         In December, the Canadian trade balance                  Canada: Small trade deficit persists in December
                                                                          Trade balance, energy vs. other merchandise
registered a $0.246B deficit, up a tad from a revised
                                                                                                            Energy
$0.201B in November. Exports increased by $0.5B or 1.7%,              9     $ billions
                                                                      8                                     Non-Energy
as did imports by $0.6B or 1.8%. In nominal terms, exports            7                                     Total
rose in seven of the last eight months of 2009. In real               6
                                                                      5
terms, they advanced in five of the last seven. Over that             4
                                                                      3
period, more than two-thirds of the improvement came from             2
automotive products, which remained on a rising trend even            1
                                                                      0
after the termination of the cash-for-clunkers program in the        -1
United States. Though outpaced by imports on the month,              -2
                                                                     -3
real exports posted the larger gain on the quarter. As a             -4
                                                                     -5
result, merchandise trade will contribute positively to              -6
economic expansion in Q4. In December, sales of new                       05                  06                 07                   08                    09
motor vehicles climbed 2.6%, slightly more than preliminary
data had led to believe. In January, the latest data suggest              NBF Economy and Strategy (data via Datastream)
motor vehicles will hold steady. Also in January, housing
starts reached 186,300 units at a seasonally adjusted
annual rate, compared with 176,100 in December and a low
of 120,400 in April. New-home prices crept up 0.4% in                     Not all businesses on same footing
December as in November.                                                  Manufacturing in better shape than small businesses
                                                                          64                                                                                              110
                                                                                                                                           ISM manufacturing (L)
United States –              In January, retail sales exceeded            62
                                                                          60                                                                            ISM
                                                                                                                                                                          108
                                                                                                                                                                          106
expectations by progressing 0.5% after dropping less than                 58                                                                     non- manufacturing       104
                                                                          56                                                                                              102
previously estimated a month earlier (-0.1%). Purchases                   54                                                                                              100
excluding auto were up 0.6% from December. Though Q1                      52                                                                                              98
                                                                          50                                                                                              96
got off to a good start, sales will certainly be hurt by the              48                                                                                              94
blizzard that hit the east coast in February. While small-                46                                                                                              92
                                                                          44                                                                                              90
business optimism strengthened only slightly in January                   42                                                                                              88
with the NFIB index ticking up 1.3 points to 89.3 from                    40                                                                                              86
                                                                          38                                                                                              84
December, the gain since the March low of 81 has been                     36
                                                                                                                              NFIB small-business
                                                                                                                                                                          82
                                                                                                                              optimism (R)
significant. Still, the index does not reflect the same surge             34                                                                                              80
                                                                          32                                                                                              78
in confidence as the ISM Manufacturing Index would                               98      99     00     01   02        03      04    05      06      07     08    09
suggest, having reached 58.4 on the month after bottoming
out at 32.5 in December 2008. This past December, the                     NBF Economy and Strategy (data via Bloomberg)

trade deficit swelled to a 12-month high of $40.2 billion.
Imports and exports shot up $8.4 billion and $4.6 billion,
respectively.
                                                                      China: bank reserve requirements and
International – European leaders announced they                       accumulation of foreign reserves
would not let Greece succumb to its credit crisis. However,               340   $ billions (6-month cumulative)                                                       %20
                                                                          320                                                                                          19
no specific pledge of financial support was made. Given the               300                                                                                          18
exposure of French and German banks to Greek debt, it is                  280
                                                                                                            Foreign reserves                                           17
                                                                          260                                      (L)                                                 16
hard to see how the two euro-zone powerhouses could                       240                                                                                          15
allow Greece to default on its debt                                       220
                                                                          200
                                                                                                                                                                       14
                                                                                                                                                                       13
                                                                          180                                                                               Reserve    12
Chinese authorities raised bank reserve requirements 50                   160
                                                                                                                                                          requirements 11
                                                                                                                                                               (R)
basis points for a second increase in as many months.                     140                                                                                          10
                                                                          120                                                                                          9
Effective February 25, banks will need to set aside 14% to                100                                                                                          8
16% of deposits for reserve purposes, depending on size.                   80
                                                                           60
                                                                                                                                                                       7
                                                                                                                                                                       6
We see this latest adjustment as a way for authorities to                  40                                                                                          5
                                                                           20                                                                                          4
keep the velocity of money under control at a time when the                     2002     2003        2004   2005       2006        2007     2008         2009    2010
resurgence in global economic growth is increasing export
                                                                      NBF Economy and Strategy
revenues and the accumulation of foreign reserves. Still,
there is plenty of liquidity in the Chinese economy to keep it
forging ahead at a brisk pace this year.




                                                      February 12, 2010                                                                                                         6
                                                                                                                    WEEKLY ECONOMIC LETTER
                                                                    THINGS TO WATCH – Canada & US
                                            Economic releases & events                                             Earnings announcements
                    Time Country Release                          Period   Previous   Consensus     NBF      Company                    Time       Qtr     Cons.
                                                                                       Estimate   Estimate                                                 EPS




                                                                                                             Pan American Silver       Bef-mkt Q4 2009      0.373




    Monday
     Feb 15




                    8:30    US   Empire Manufacturing              FEB       15.9        17.7                Waste Management          Bef-mkt Q4 2009      0.482
                    8:30    CA   Manufacturing Sales MoM           DEC      0.10%       2.00%                Merck & Co Inc            Bef-mkt Q4 2009      0.769
                    9:00    US   Total Net TIC Flows               DEC     $26.6B         --                 Genuine Parts Co          Bef-mkt Q4 2009      0.508
                    13:00   US   NAHB Housing Market Index         FEB       15.0        15.0                CF Industries Holdings    Bef-mkt Q4 2009      1.229
                                                                                                             Qwest Communications In       7:00 Q4 2009     0.078
    Tuesday                                                                                                  Abercrombie & Fitch           7:00 Q4 2010     0.868
                                                                                                             Kraft Foods Inc               7:00 Q4 2009      0.45
     Feb 16                                                                                                  Whole Foods Market        Aft-mkt   Q1 2010    0.262
                                                                                                             FMC Technologies Inc      Aft-mkt   Q4 2009    0.743
                                                                                                             Nabors Industries Ltd     Aft-mkt   Q4 2009    0.168




                    7:00    US   MBA Mortgage Applications        Feb-12    -1.20%        --                 Rogers Communication      Bef-mkt Q4 2009      0.570
                    8:30    US   Housing Starts                    JAN      557K        580K       590K      IAMGOLD Corp              Bef-mkt Q4 2009      0.147
                    8:30    US   Building Permits                  JAN      653K        620K                 Intact Financial Corp         7:00 Q4 2009     0.598
                    8:30    CA   Wholesale Sales MoM               DEC      2.50%       0.50%                Loblaw Cos Ltd                8:00 Q4 2009     0.484
                    9:15    US   Industrial Production             JAN      0.60%       0.80%                Agnico-Eagle Mines        Aft-mkt   Q4 2009    0.250
 Wednesday          9:15    US   Capacity Utilization              JAN     72.00%      72.60%                Kinross Gold Corp         Aft-mkt   Q4 2009    0.152
                                                                                                             Westjet Airlines Ltd                Q4 2009    0.031
     Feb 17                                                                                                  Chesapeake Energy         Aft-mkt   Q4 2009    0.694
                                                                                                             Hewlett-Packard Co        Aft-mkt   Q1 2010    1.055
                                                                                                             XTO Energy Inc                      Q4 2009    0.858
                                                                                                             Deere & Co                          Q1 2010    0.183
                                                                                                             Devon Energy Corp                   Q4 2009     1.25


                    7:00    CA   Consumer Price Index MoM          JAN      -0.30%      0.30%      0.1%      Barrick Gold Corp         Bef-mkt Q4 2009      0.568
                    7:00    CA   Consumer Price Index YoY          JAN      1.30%       1.90%      1.70%     Fairfax Financial Hold.   Aft-mkt   Q4 2009    5.250
                    7:00    CA   Bank Canada CPI Core MoM          JAN      -0.30%      0.00%      0.00%     Superior Plus Corp                  Q4 2009    0.400
                    7:00    CA   Bank Canada CPI Core YoY          JAN      1.50%       1.90%      1.90%     Canadian Utilities Ltd              Q4 2009    0.818
                    8:30    US   Producer Price Index (MoM)        JAN      0.20%       0.80%                Inter Pipeline Fund                 Q4 2009    0.195
   Thursday         8:30    US   PPI Ex Food & Energy (MoM)        JAN      0.00%       0.10%                Atco Ltd                            Q4 2009    1.090
                    8:30    US   Producer Price Index (YoY)        JAN      4.40%       4.40%                Boardwalk Real Estate               Q4 2009    0.589
     Feb 18         8:30    US   PPI Ex Food & Energy (YoY)        JAN      0.90%       0.80%                Nexen Inc                           Q4 2009    0.503
                    8:30    US   Initial Jobless Claims           Feb-13    440K        445K                 Penn West Energy                    Q4 2009    -0.157
                    8:30    CA   Int'l Securities Transactions     DEC     10.538B     6.500B                Keyera Facilities                   Q4 2009    0.505
                    10:00   US   Philadelphia Fed.                 FEB       15.2        17.5                Russel Metals Inc                   Q4 2009    0.171
                    10:00   US   Leading Indicators                JAN      1.10%       0.50%                Wal-Mart Stores Inc           7:00 Q4 2010     1.118


                    8:30    US   Consumer Price Index (MoM)        JAN      0.10%       0.30%      0.40%     Brookfield Asset Man.         8:00 Q4 2009     0.102
                    8:30    US   CPI Ex Food & Energy (MoM)        JAN      0.10%       0.20%      0.10%     JC Penney Co Inc          Bef-mkt Q4 2010      0.819
                    8:30    US   Consumer Price Index (YoY)        JAN      2.70%       2.80%      2.90%     Pinnacle West Capital               Q4 2009    -0.107
                    8:30    US   CPI Ex Food & Energy (YoY)        JAN      1.80%       1.80%      1.70%     PG&E Corp                           Q4 2009    0.731
                    8:30    CA   Leading Indicators MoM            JAN      1.50%       1.10%
      Friday        8:30    CA   Retail Sales MoM                  DEC      -0.30%      0.30%      0.40%
                    8:30    CA   Retail Sales Less Autos MoM       DEC      0.00%       0.20%      0.70%
     Feb 19



Source: Bloomberg


                                                                 February 12, 2010                                                                                 7
                                                                                                                           WEEKLY ECONOMIC LETTER
                                                                                                              ECONOMIC TABLES
                           TABLE 1 - NORTH AMERICAN FINANCIAL INDICATORS
                                                               February 12, 2010
                                                                       Monthly Growth (%)             Annualized Growth                   Cumulated since
     Growth Rates Unless                    Reference                  Past     Prev.   Month        Average of the last     Since        beginning of year
     Otherwise Indicated                    Period          Level     Month    Month    Before         3 Mos.      6 Mos.    12 Mos.          ref.      prec.

UNITED STATES
MONETARY AGGREGATES                                     ($Billions)
   M1                                   *    Jan 2010       1677      -1.0        0.5       0.7         5.9         9.3          6.5       6.5       14.0
   M2                                   *    Jan 2010       8463      -0.7        0.2       0.3         2.4         1.9          1.9       1.9       10.1
CREDIT MEASURES
   Consumer Credit                      *    Dec 2009       2457      -0.1       -0.9       -0.2        -4.4        -4.2      -4.0        -2.2       4.3
   Mortgage (Banks)                     *    Dec 2009       3809      -0.4       1.8        -0.7        -2.3        -1.6      -0.4        3.7         6.8
   Business                             *    Dec 2009       1343      -1.7       -1.3       -2.2       -21.5       -18.0     -17.0        -4.3       20.2

CANADA
MONETARY AGGREGATES
   M2+ gross                                 Nov 2009       1314      0.1         0.5       0.5         6.4         7.5          8.8      12.0        9.9
   Personal Deposits (Banks) (2)             Dec 2009        647      0.5         0.1       0.0         2.3         6.3          8.1      13.4        9.5
CREDIT MEASURES
   Consumer                                  Nov 2009        444      0.8        1.6        0.6        11.1         9.0       9.7         7.9        9.0
   Mortgages                                 Nov 2009        953      0.5        0.7        0.7         7.4         6.7       7.4          7.7       11.9
   Short - Term Business Loans               Dec 2009        331      -1.2       -2.4       -1.3       -14.8       -17.7     -15.9        -3.3       10.4
   Business (S.T. + L.T.)               *    Dec 2009       1206      -0.1       0.0        0.4         2.2         -1.0      -0.4         1.9        5.8
   Private (Consumer+Business)          *    Nov 2009       2604      0.3        0.7        0.6         5.0         3.4       4.1         5.0        8.5
   Federal Debt                              Jan 2010        550      0.8        -0.7       0.8         5.9        15.0      14.9         14.9       24.6
INTEREST AND EXCHANGE RATES
                                            Reference          Last   1 week     2 w.        Average of last Thursdays            13 w.     26 w.      52 w.
                                            Thursday            day      ago     ago        13 w.         26 w.     52 w.          ago       ago        ago

UNITED STATES
INTEREST RATES
    Federal Funds Target Rate           *     11 Feb           0.25     0.25       0.25       0.25        0.25        0.25         0.25      0.25       0.25
    Prime Rate                          *     11 Feb           3.25     3.25       3.25       3.25        3.25        3.25         3.25      3.25       3.25
    3-month Treasury Bills              *     11 Feb           0.11     0.09       0.08       0.06        0.08        0.13         0.07      0.17       0.29
    2-year Bonds                        *     11 Feb           0.87     0.80       0.86       0.85        0.89        0.94         0.81      1.09       0.88
    5-year Bonds                        *     11 Feb           2.37     2.30       2.40       2.34        2.34        2.27         2.25      2.56       1.72
    10-year Bonds                       *     11 Feb           3.69     3.61       3.64       3.60        3.50        3.38         3.44      3.59       2.69
    30-year Bonds                       *     11 Feb           4.64     4.56       4.55       4.52        4.37        4.25         4.39      4.42       3.46
    Corporate High-yield (Lehman)       *     11 Feb           9.51     9.02       8.96       9.16        9.85       12.39         9.76     11.25      17.54
    Corporate Invest. Grade (Lehman)    *     11 Feb           4.55     4.40       4.42       4.47        4.62        5.63         4.61      5.24       7.10
  SPREADS
    Corp. High-yield - Treas. 10y.      *     11 Feb           5.82     5.41       5.32       5.56        6.35        9.01         6.32      7.66      14.85
    Corp. Invest. grade - Treas. 10y.   *     11 Feb           0.86     0.79       0.78       0.87        1.12        2.24         1.17      1.65       4.41
    Treasuries 30y. - 3-m. T.B.         *     11 Feb           4.53     4.47       4.47       4.46        4.29        4.12         4.32      4.25       3.17
EXCHANGE RATE
    Major currencies, traded-weighted         29 Jan        75.84      75.25      75.22     74.01       74.08        76.88        73.23     75.22      82.78

CANADA
INTEREST RATES
    Prime Rate                          *     11 Feb           2.25     2.25       2.25       2.25        2.25        2.31         2.25      2.25       3.00
    Target overnight rate               *     11 Feb           0.25     0.25       0.25       0.25        0.25        0.31         0.25      0.25       1.00
    30-day commercial paper             *     11 Feb           0.34     0.35       0.35       0.35        0.35        0.39         0.35      0.33       0.94
    3-month Treasury Bills              *     11 Feb           0.17     0.17       0.16       0.19        0.20        0.26         0.23      0.23       0.70
    1-year Treasury Bills               *     11 Feb           0.57     0.54       0.54       0.57        0.56        0.57         0.54      0.57       0.82
    5-year Bonds                        *     11 Feb           2.54     2.44       2.43       2.57        2.61        2.42         2.71      2.62       2.12
    10-year Bonds                       *     11 Feb           3.47     3.37       3.33       3.43        3.42        3.31         3.50      3.52       2.94
    30-year Bonds                       *     11 Feb           4.06     3.99       3.94       4.01        3.96        3.90         4.02      4.00       3.69
  SPREADS
    Prime - 30d. Commercial paper       *     11 Feb           1.91     1.90       1.90       1.90        1.90        1.92         1.90      1.92       2.06
    Long Term - Short Term              *     11 Feb           3.89     3.82       3.78       3.82        3.76        3.64         3.79      3.77       2.99
  CANADA UNITED STATES SPREADS
    3-month T-Bills                     *     11 Feb         0.06       0.08        0.08      0.13        0.13        0.13         0.16      0.06       0.41
    Long Term Bonds                     *     11 Feb        -0.58      -0.57       -0.62     -0.51       -0.41       -0.35        -0.37     -0.42       0.23
EXCHANGE RATE
    US$ /CDN$ (GTIS)                    *     11 Feb      0.9517      0.9324     0.9376    0.9488      0.9416      0.8984        0.9473   0.9203      0.8050
    Trade-weighted (1990=100) G-10      *     11 Feb       107.0       105.8      106.4     107.0       106.1       101.8         107.2    104.4         91.5

STOCK INDICES                                                          Monthly Growth (%)                      Growth Over (%)                  Since
                                         Reference                     Past     Prev.   Month                                             beginning of year
                                         Thursday          Level      Month    Month    Before       3 Months    6 Months        1 Year        ref.     prec.
     Dow Jones (U.S.)                   * 11 Feb         10144.2        -4.9      1.8      1.8           -1.4         9.8          27.8       -3.1       -7.3
     S&P 500 (U.S.)                     * 11 Feb          1078.5        -6.0      3.7      0.7           -1.8         8.5          29.4       -2.5       -4.6
     NASDAQ (U.S.)                      * 11 Feb          2177.4        -5.8      5.6      1.1            0.5        10.5          42.3       -0.6        1.5
     S&P/TSX (Can.)                     * 11 Feb         11435.5        -4.3      4.6     -0.1            0.0         7.6          30.9        0.1        4.1

     * Update                           (1) Commercial Banks                   (2) Not seasonnally adjusted



                                                        February 12, 2010                                                                                       8
                                                                                                                                 WEEKLY ECONOMIC LETTER
                                                                                                                     ECONOMIC TABLES
                                 TABLE 2 - UNITED STATES ECONOMIC INDICATORS
                                                                       February 12, 2010
                                                                      Monthly Growth (%)                 Annualized Growth (%)                     Cumulated since
     Growth Rates Unless                             Reference        Past      Prev.   Month              Average of the last          Since      beginning of year
     Otherwise Indicated                             Period          Month     Month   Before           3 Mos.    6 Mos.     12 Mos.    12 Mos.        ref.      prec.

  Index of 12 Leading Indicators                      Dec 2009          1.1      1.0            0.3       9.5        10.3        0.4        7.7        0.4       -2.8
  Consumer Confidence Index (1985=100)                Jan 2010         55.9     53.6           50.6      53.4        52.8       46.8       37.4       55.9       37.4
  I.S.M. Manufacturing Index (level)                  Jan 2010         58.4     54.9           53.7      55.7        54.6       48.1       35.5       58.4       35.5
     - Non-manufacturing (level)                      Jan 2010         52.2     53.2           49.6      51.7        52.2       48.7       44.1       52.2       44.1

DOMESTIC DEMAND
  Sales new autos & light trucks (000,000)            Jan 2010         10.8     11.3           10.9      11.0        11.1       10.5        9.6       10.8        9.6
  Retail Sales                                   *    Jan 2010          0.5     -0.1            2.0       8.8          6.0      -4.8        4.7        4.7       -9.7
    - Motor vehicle                              *    Jan 2010          0.0      0.1            1.8       5.6        12.5       -9.2        5.5        5.5      -22.8
    - Other                                      *    Jan 2010          0.6     -0.2            2.0       9.5          4.7      -3.9        4.6        4.6       -6.5
  Consumer Spending:     Total ($ current)            Dec 2009          0.2      0.7            0.6        4.7         4.0      -0.4        4.0       -0.4        3.1
                         Total ($ constant)           Dec 2009          0.1      0.4            0.3        2.0         1.7      -0.6        1.8       -0.6       -0.2
  Personal Income                                     Dec 2009          0.4      0.5            0.3        4.0         2.4      -1.4        0.5       -1.4        2.9
  Personal Savings Rate (3)                           Dec 2009          4.8      4.5            4.6        4.6         4.6        4.6       4.7        4.6        2.6
  New Orders                                          Dec 2009          1.0      1.0            0.8      11.4          9.3     -17.2        3.6      -17.2        0.0
     - Non-Defence Capital Goods exc. Aircraft        Dec 2009          2.2      3.2           -1.8      12.2        11.9      -18.2       -1.0      -18.2       -0.5
  Unfilled Orders                                     Dec 2009         -1.0     -0.7           -0.4      -6.5        -7.6       -8.0      -10.3       -8.0       13.0
  Business Inventories                                Nov 2009          0.4      0.4           -0.5      -6.1       -12.6       -8.2      -11.0       -8.9        5.4
  Inventories / Shipments Businesses                  Nov 2009         1.28     1.30           1.31      1.30        1.33       1.38       1.44       1.38       1.30
  Manufacturers' Shipments                            Dec 2009          1.9      1.6            0.9      14.5          6.2     -15.2        2.6      -15.2        1.6
  Manufacturers' Inventories                          Dec 2009         -0.1      0.2            0.4      -1.3        -8.9       -7.8       -8.6       -7.8        6.1
  Inventories / Shipments Manuf.                      Dec 2009         1.29     1.32           1.34      1.32        1.34       1.39       1.45       1.39       1.28
  Housing Starts (000) (1)                            Dec 2009          557     580            524        554         570        552       556        552        900
  New Home Sales                                      Dec 2009         -7.6     -9.3            4.3     -28.5        20.5      -22.6       -8.6      -22.6      -37.4
  Existing Home Sales                                 Dec 2009        -16.8      8.3            9.5      68.0        41.4         5.4      12.7        5.4      -12.5

PRODUCTION
  Industrial Production                               Dec 2009          0.6       0.6           0.2       7.0         2.3       -9.7        -2.0      -9.7       -2.2
     - Consumer Goods                                 Dec 2009          0.6       0.0           0.6       8.0         3.6       -5.1         0.3      -5.1       -2.7
     - Hitech goods                                   Dec 2009          2.4       0.1           0.9       5.5         5.6      -14.3         3.1     -14.3       11.3

EXTERNAL AND FISCAL BALANCES
  Exports                                        *    Dec   2009        3.3       0.9        2.7         28.6        18.8      -15.0        7.4      -15.0       11.2
  Imports                                        *    Dec   2009        4.8       2.6        0.7         34.7        23.1      -23.3        4.6      -23.3        7.6
  Merch. Trade Balance ($ billions)              *    Dec   2009      -40.2     -36.4      -33.2        -36.6       -34.5      -31.7      -41.9      -31.7      -58.0
  Real merchandise trade balance                 *    Dec   2009      -43.7     -40.9      -38.4        -41.0       -40.2      -40.1      -49.4      -40.1      -50.2
  Federal budget balance last 12 months (2)           Dec   2009    -1471.7   -1431.6    -1436.6                                         -680.5    -1471.7     -680.5

INFLATION AND COSTS
  Consumer Prices                                     Dec 2009          0.1      0.4            0.3       3.4         3.0       -0.3        2.7       -0.3        3.8
     - Excluding Food and Energy                      Dec 2009          0.1      0.0            0.2       1.5         1.7        1.7        1.8        1.7        2.3
  PCE Deflator exc. Food and Energy                   Dec 2009          0.1      0.0            0.2       1.4         1.4        1.5        1.5        1.5        2.4
  Industrial Prices, Finished Goods                   Dec 2009          0.2      1.8            0.3       7.6         4.6       -2.4        4.7       -2.4        6.4
  Average Hourly Earnings (4)                         Jan 2010          0.3      0.2            0.1       2.5         2.6        2.9        2.5        2.5        3.8
  Industrial Capacity Utilization Rate                Dec 2009         72.0     71.5           71.0      71.5        70.8       70.2       72.7       70.2       77.6
  Median Price, Single-Family Homes (5)               Dec 2009          4.8     -1.6           -2.2     -11.4         5.8      -11.6        1.4      -11.6       -9.2

LABOUR MARKET
  New Jobs (000) (6)                                  Jan   2010        -20     -150             64       -35        -128       -335      -4022         -20      -779
     - Manufacturing (000)                            Jan   2010         11      -23            -25       -12          -33        -84     -1003          11      -279
     - Services (000)                                 Jan   2010         40      -96             97        14          -40      -168      -2013          40      -340
  Average weekly hours (6)                            Jan   2010        0.3       0.0           0.7       1.4         -2.7       -6.6       -3.5       -3.5       -5.2
  Civilian Unemployment Rate (7)                      Jan   2010        9.7     10.0           10.0       9.9          9.9        9.4        7.7        9.7        7.7

NATIONAL ACCOUNTS AND OTHER                                             Annualized Growth Rates
QUARTERLY INDICATORS                                   Q4 2009     Q3 2009 Q2 2009 Q1 2009 Q4 2008               Q4 2008      2009       2008       2007
  GDP Chained 2005 dollars                                5.7         2.2      -0.7      -6.4     -5.4              -2.7       -2.4       0.4        2.1
  Consumption                                             2.0         2.8      -0.9      0.6      -3.1              -3.5       -0.6       -0.2       2.6
  Residential Construction                                5.7        18.9     -23.2     -38.2    -23.2             -15.9      -20.4      -22.9      -18.5
  Business Investment                                     2.9        -5.9      -9.6     -39.2    -19.4              -6.1      -17.9       1.6        6.2
    - Machinery and Equipment                            13.3         1.5      -4.9     -36.4    -25.9              -9.4      -16.9       -2.6       2.6
  Government Spending                                     -0.2        2.7       6.7      -2.6     1.2               4.8        1.9        3.1        1.7
  Exports                                                18.1        17.8      -4.1     -29.9    -19.5              -3.6       -9.9       5.4        8.7
  Imports                                                10.5        21.3     -14.7     -36.4    -16.7              -2.2      -14.2       -3.2       2.0
  Change in Inventories (1) (2)                          -33.5      -139.2   -160.2    -113.9    -37.4             -29.7     -111.7      -25.9      19.5
  GDP Deflator                                            0.6         0.4       0.0      1.9      0.0               4.1        1.2        2.1        2.9
  Personal Disposable Income                              2.1        -1.4       6.2      0.2      3.4               -8.5       1.3        0.5        2.2
                                                       Q4 2009     Q3 2009 Q2 2009 Q1 2009 Q4 2008               Q3 2008      2009       2008       2007
  Labour Productivity (4)                                 6.2         7.2       6.9      0.3      0.8               -0.1       2.9        1.8        1.8
  Unit Labor Costs (4)                                    -4.4       -1.5       0.0      -5.0     2.0               4.6        -0.9       1.0        2.4
                                                       Q3 2009     Q2 2009 Q1 2009 Q4 2008 Q3 2008               Q2 2008      2008       2007       2006
  Current Account (current $)                           -432.1      -391.9   -417.8    -619.5   -736.7            -750.9     -706.1     -726.6     -803.5
           as a % of GDP                                  -3.0       -2.8      -2.9      -4.3     -5.1              -5.2       -4.9       -5.2       -6.0
                                                       Q3 2009     Q2 2009 Q1 2009 Q4 2008 Q3 2008               Q2 2008      2008       2007       2006
  Corporate Profits (8)                                  50.7        15.7      22.8     -64.4    15.3              -14.5      -11.8       -4.1      10.5
           as a % of GDP                                  9.5         8.7       8.3      7.8     10.0               9.7        9.4        9.7       10.2

     * Update
     (1) Annual Rate                                                                    (5)   Existing Homes Sold
     (2) $ Billions                                                                     (6)   Non-Farm Payroll Survey
     (3) Personal Savings as a % of Personal Disposable Income                          (7)   Household Survey
     (4) Nonfarm Business                                                               (8)   Current $ and before taxes




                                                                   February 12, 2010                                                                                     9
                                                                                                                                         WEEKLY ECONOMIC LETTER
                                                                                                                            ECONOMIC TABLES
                                         TABLE 3 - CANADIAN ECONOMIC INDICATORS
                                                                           February 12, 2010
                                                                          Monthly Growth (%)                 Annualized Growth (%)                       Cumulated since
     Growth Rates Unless                                Reference         Past      Prev.   Month              Average of the last           Since       beginning of year
     Otherwise Indicated                                Period           Month     Month   Before           3 Mos.    6 Mos.     12 Mos.     12 Mos.         ref.      prec.

  Index of Leading Indicators (Stat. Can.)               Dec 2009           1.5           1.3       0.7      14.3          5.2        -4.0        2.0       -4.0        0.7

DOMESTIC DEMAND
  New motor vehicle sales (000)                     *    Dec 2009         128.7        125.4      133.8     129.3       128.5       124.0      1488.4    1488.4      1674.1
  Retail Sales ($ current)                               Nov 2009          -0.3          1.0        1.1       9.1         6.9        -4.1         1.2      -3.8         4.4
    - Automobile Dealers                                 Nov 2009          -2.2          3.8        1.1      20.9        20.8       -10.2         2.7      -9.0        -2.8
    - Other                                              Nov 2009           0.0          0.3        1.1       6.4         4.3        -2.6         1.1      -2.6        29.4
  Retail Sales ($ constant)                              Nov 2009          -1.0          0.8        1.2       7.3         4.8        -2.0         0.7      -1.8         3.3

  Manufacturer's Shipments ($ current)                   Nov 2009           0.1          2.1        0.8       12.9         4.6       -18.1      -10.0      -18.8        0.2
  New Orders                                             Nov 2009           3.2         -2.2        6.4       18.4         9.7       -23.3      -12.8      -23.8        0.8
     - Durables                                          Nov 2009           5.7         -6.9       14.5       26.1        12.7       -31.5      -22.6      -32.4       -4.2
  Unfilled Orders                                        Nov 2009          -1.4         -3.6       -0.4      -27.4       -29.5        -5.7      -27.7       -7.8       20.9
  Manufacturer's Inventories                             Nov 2009          -0.3          0.2       -2.3      -12.2       -12.8        -5.3      -12.2       -6.0        1.7
  Inventories / Shipments Ratio                          Nov 2009          1.40         1.41       1.43       1.41        1.46        1.53       1.44       1.53       1.32
  Manufacturer's Shipments ($ constant)                  Nov 2009          -0.8          1.3        1.0        7.7         1.7       -16.2       -8.4      -16.6       -6.4

  Housing Starts (000) (1)                          *    Jan 2010         186.3        176.1      175.8     179.4       175.8       153.6       135.6      186.3      135.6
  Number of existing homes sold (MLS)                    Dec 2009           2.0          1.5        5.1      39.5        75.0         7.7        71.6        7.7      -17.1
  Number of personal bankrupties (2)                     Nov 2009          -3.8        -28.4       29.0     -13.0        15.0        32.4         3.9       31.2       10.9
  Number of commercial bankrupties (2)                   Nov 2009          -7.7        -11.9       31.6      -1.5       -17.9       -10.1       -21.7      -11.2       -2.4

PRODUCTION
  Real Domestic Product                                  Nov 2009           0.4           0.3       0.5        3.3        -0.8        -3.1       -1.7       -3.2         0.8
    - Manufacturing                                      Nov 2009           0.0           0.1       1.0        3.3        -7.0       -13.3      -10.6      -13.8        -5.4
    - Construction                                       Nov 2009           1.1           0.3       0.3        4.2        -3.5        -5.1       -5.0       -5.6         3.1
  Services                                               Nov 2009           0.4           0.2       0.3        2.7         2.1        -0.3        1.2       -0.3         2.4

EXTERNAL, FISCAL AND EXCHANGE BALANCES
  Exports                           * Dec                      2009          1.7          1.1        4.4     25.6          1.0       -24.6        -8.0    -24.6         5.8
  Imports                           * Dec                      2009          1.8          3.6       -0.6       4.6         4.5       -15.6        -9.1    -15.6         6.7
    - Capital Goods                 * Dec                      2009         -2.4          4.7       -3.8    -15.2         -9.1       -12.0      -19.1     -12.0        39.2
  Merch. Trade Balance ($ millions) * Dec                      2009        -246         -201        560        38        -666         -399       -721      -399      4,065
  Change in Official Reserves       * Dec                      2009      -2,063          184     -1,926    -1,268       1,616          874     10,485    10,485     12,548
      Level (US$):        54,357                                                                                                                           Fiscal year
  Fed. budget balance last 12 months ($ billions)        Nov 2009         -38.8        -34.3      -31.6                                           3.3     -36.3         0.0

INFLATION AND COSTS
   Consumer Prices                                       Dec 2009          -0.3           0.5      -0.1       0.6          1.2         0.3        1.3        0.3         2.4
      - Excluding Food and Energy                        Dec 2009          -0.4           0.2       0.2       1.3          1.2         1.1        0.6        1.1         1.2
      - Core inflation (4)                               Dec 2009          -0.3           0.4       0.1       1.9          1.8         1.8        1.5        1.8         1.7
   Average Hourly Earnings (2)                           Jan 2010           0.7           0.1      -0.1       4.8          3.2         3.2        1.8        1.8         4.8
   Price of New Housing icluding land               *    Dec 2009           0.4           0.4       0.3       4.0          0.3        -2.3       -0.9       -2.3         3.4
   Avg. Price of Existing Homes Sold (MLS)               Dec 2009           0.9           1.0       1.8      18.4         25.8         4.3       20.4        4.3        -1.2
   Industrial Prices (1992=100)                          Dec 2009          -0.1           0.9      -0.3       0.2         -2.0        -3.4       -0.8       -3.4         4.3

LABOUR MARKET
  Labour Force                                           Jan   2010         0.1         -0.1        0.4       1.2          0.8        0.7         0.9        0.9        1.0
  Job creation (000)                                     Jan   2010        43.0        -28.3       72.2      29.0         22.9       -1.3       -16.0       43.0     -130.0
    - Manufacturing                                      Jan   2010       -15.7        -12.1       10.2      -5.9         -2.4       -7.9       -95.2      -15.7      -97.3
    - Services                                           Jan   2010        66.1        -12.8       67.6      40.3         19.6       11.0       131.5       66.1       -1.8
    - Full Time                                          Jan   2010         1.5        -29.6       15.6      -4.2         24.9       -6.0       -71.9        1.5     -125.8
    - Part Time                                          Jan   2010        41.5          1.3       56.6      33.1         -2.0        4.7        55.9       41.5       -4.2
  Unemployment Rate                                      Jan   2010         8.3          8.4        8.4       8.4          8.4        8.4         7.3        8.3        7.3

NATIONAL ACCOUNTS AND OTHER                                                 Annualized Growth Rates
QUARTERLY INDICATORS                                      Q3 2009      Q2 2009 Q1 2009 Q4 2008 Q3 2008               Q2 2008         2008       2007       2006
  GDP Chained (2002) $                                           0.4        -3.1      -6.2    -3.7   0.4                  0.3          0.4        2.5       2.9
  Consumption                                                    3.1         1.8      -1.4    -3.1   0.6                  1.1          3.0        4.6       4.1
  Business Investments                                           4.2       -16.6     -31.4   -16.2   2.1                 -2.6          0.2        3.7      10.0
     -Machinery and Equipment                                   25.6       -15.4     -37.3   -28.5  -2.9                 -5.8          0.5        4.4      10.5
  Residential Construction                                       8.1         7.4     -20.6   -23.0  -4.9                 -1.3         -2.7        2.9       2.0
  Government Expenditures                                        5.0         3.3       2.2     2.5   0.0                  4.6          3.7        3.3       3.0
  Final Domestic Demand                                          4.7         0.6      -6.1    -4.9   0.5                  1.5          2.6        4.1       4.5
  Exports                                                       15.3       -19.5     -29.8   -17.7  -4.1                 -4.1         -4.7        1.1       0.8
  Imports                                                       36.0        -6.9     -39.2   -23.4  -3.4                  3.0          0.8        0.8       5.8
  Change in Inventories (1)                                     -5.8        -9.1     -10.6    10.3  15.0                 14.5        12.2        15.0      12.1
  Real Disposible Income                                         0.4         4.0      -1.9     4.5  -0.7                  0.8          4.2        3.6       5.8
  Personal savings Rate                                          4.8         5.5       4.9     4.9   3.1                  3.4          3.7        2.5       3.5
  GDP Price Deflator                                             3.1         0.7      -5.9   -11.2   3.3                 10.1          3.9        3.2       2.6
  Corporate Profits (nominal)                                   22.3       -37.5     -57.7   -65.0  15.0                 34.7          5.7        4.1       5.1
           as a % of GDP                                         9.0         8.7       9.7    11.6  14.6                 14.2        13.5        13.3      13.5
  Indust. Capacity Utilization Rate                             67.5        67.7      70.5    76.1  78.9                 79.5        78.6        82.4      82.9
  Labour Productivity, Business Sector                          -1.2         0.4      -0.4    -0.4   0.4                  0.0         -1.1        0.5       1.2
  Unit Labour Cost, Business Sector                              0.0         0.3       3.3     6.7   3.3                  3.7          5.2        3.1       3.8
                                                           Q3 2009      Q2 2009 Q1 2009 Q4 2008 Q3 2008              Q2 2008         2008       2007       2006
  Current Account (current $) (1)                              -52.5       -47.8     -31.1   -31.0  13.0                 27.0          0.0        8.1      15.6
           as a % of GDP                                        -3.4        -3.2      -2.0    -2.0   0.8                  1.7          0.0        0.5       1.0

  * Update
  (1) Annual Rate, $ billions                                                      (4) C.P.I. excluding the 8 most volatile components and the effect
  (2) Not Seasonally Adjusted                                                      of indirect taxes
  (3) Current and before taxes




                                                                       February 12, 2010                                                                                       10
                                                                                                                     WEEKLY ECONOMIC LETTER
                                                                                                         ECONOMIC TABLES
         Economic and Strategy Team
                                 TABLE 4 - PROVINCIAL ECONOMIC INDICATORS
                                                                February 12, 2010
                                                                Monthly Growth (%)         Annualized Growth (%)                    Cumulated since
   Growth Rates Unless                           Reference      Past      Prev.   Month      Average of the last         Since      beginning of year
   Otherwise Indicated                           Period        Month     Month   Before   3 Mos.    6 Mos.     12 Mos.   12 Mos.        ref.      prec.

QUEBEC
 DOMESTIC DEMAND AND REVENUE
   Retail Sales                                   Nov 2009       -0.3      0.1      1.9     9.5        8.7       -1.6         2.5      -1.5        5.8
   Manufacturing Shipments                        Nov 2009        0.6      6.9     -1.3     9.5        2.6      -14.1        -5.6     -14.8        2.6
   Housing Starts (000) (2)                  *    Jan 2010       55.4     52.1     46.5    51.3       48.7       44.9        44.3      55.4       44.3
   Number of existing homes sold (MLS)            Dec 2009        3.0      4.9      4.2    40.2       46.7        3.3        53.7       3.3       -4.8
   W ages and Salaries                            Sep 2009       -0.2      0.9     -0.4     2.1        0.6        1.9         1.7       1.5        3.0
   Value of merchandise exports (1)          *    Dec 2009        5.1     -0.1      8.3    38.8       -6.5      -18.6       -12.0     -18.6        3.1
   Number of personal bankrupties (1)             Nov 2009       -5.2    -24.6     30.7     0.4        5.3       23.3        -2.4      22.0       10.8
   Number of commercial bankrupties (1)           Nov 2009        2.7      4.2     14.3    -1.8      -25.3       -9.7       -24.9     -11.1        6.0
 PRICES
   Consumer Price Index (1)                       Dec 2009       -0.3      0.6     -0.1     0.6        1.8        0.6         2.1       0.6        2.1
   Average Hourly Earnings (1)                    Jan 2010        0.1     -0.4      0.0     2.8        3.6        3.4         1.1       1.1        5.9
   Price of New Housing inc. Land (1)        *    Dec 2009        0.1      0.4      0.5     4.1        2.2        3.1         2.9       3.1        5.0
   Avg. Price of Existing Homes Sold (MLS)        Dec 2009       -0.8     -1.4      2.1    -0.7        9.9        4.4         7.9       4.4        3.7
 LABOR MARKET
   Job creation (000)                             Jan 2010        6.2      1.0     21.3     9.5        6.9        1.3        15.5       6.2      -27.2
   Unemployment rate                              Jan 2010        8.0      8.4      8.1     8.2        8.4        8.5         7.9       8.0        7.9
   Participation rate                             Jan 2010       64.8     65.1     64.9    64.9       65.0       65.2        65.2      64.8       65.2

ONTARIO
 DOMESTIC DEMAND AND REVENUE
   Retail Sales                                   Nov 2009       -0.4      1.5      0.7    10.1        7.1       -3.7         2.3      -3.3        4.6
   Manufacturing Shipments                        Nov 2009       -0.8      0.2      3.0    21.7        9.5      -19.5       -12.4     -20.2       -4.7
   Housing Starts (000) (2)                  *    Jan 2010       55.6     54.5     55.8    55.3       57.4       51.0        44.8      55.6       44.8
   Number of existing homes sold (MLS)            Dec 2009        4.3      3.2      5.6    55.9       70.7        8.2        75.8       8.2      -15.2
   W ages and Salaries                            Sep 2009        0.0      0.4     -1.0    -3.9       -3.5        0.2        -2.3      -0.8        4.8
   Value of merchandise exports (1)          *    Dec 2009       -3.9     -5.5      2.3    39.4        6.2      -23.4        -9.6     -23.4       -7.6
   Number of personal bankrupties (1)             Nov 2009       -1.3    -31.4     29.3   -15.4       15.6       33.1         3.4      31.9       12.4
   Number of commercial bankrupties (1)           Nov 2009      -21.4    -20.4     54.6    30.9       -6.4       -8.7       -21.4      -8.8       -5.6
 PRICES
   Consumer Price Index (1)                       Dec 2009       -0.4      0.6      0.1     1.7        0.9        0.4         1.2       0.4        2.3
   Average Hourly Earnings (1)                    Jan 2010        0.9      0.4     -0.3     5.6        2.2        2.6         2.0       2.0        3.6
   Price of New Housing inc. Land (1)        *    Dec 2009        0.5      0.5      0.3     4.6        0.8        0.1         1.0       0.1        3.5
   Avg. Price of Existing Homes Sold (MLS)        Dec 2009        0.9      1.4      1.8    19.1       22.1        4.6        17.9       4.6        0.7
 LABOR MARKET
   Job creation (000)                             Jan 2010       30.3    -23.2     19.3     8.8        8.5       -1.3       -15.0      30.3      -75.5
   Unemployment rate                              Jan 2010        9.2      9.2      9.2     9.2        9.2        9.1         8.1       9.2        8.1
   Participation rate                             Jan 2010       67.2     67.0     67.3    67.2       67.2       67.3        67.6      67.2       67.6


NEWFOUNDLAND & LABRADOR
 DOMESTIC DEMAND AND REVENUE
   Retail Sales                                   Nov 2009       -0.7      1.6      3.7    14.6       12.1        2.1         6.2       2.3        8.3
   Manufacturing Shipments                        Nov 2009       -9.1     -6.2     -3.0   -15.3       67.8      -33.2        -3.4     -33.5       34.6
   Housing Starts (000) (2)                  *    Jan 2010        3.6      3.8      3.3     3.6        3.2        3.1         4.3       3.6        4.3
   Number of existing homes sold (MLS)            Dec 2009        5.8      3.9      0.8    50.9       17.7       -5.9        40.1      -5.9        5.0
   W ages and Salaries                            Sep 2009        1.9      0.6     -0.3     1.8        2.9        4.3         4.2       3.9        8.0
   Value of merchandise exports (1)          *    Dec 2009        7.4    -18.1     22.5   -45.6       22.7      -41.8        -0.7     -41.8       26.6
   Number of personal bankrupties (1)             Nov 2009      -13.3     -7.5     14.6   -15.6        5.9       16.2        22.8      18.5        1.8
   Number of commercial bankrupties (1)           Nov 2009      -85.7    250.0    100.0   671.6      -42.0        2.8    #DIV/0!       -6.1      -32.7
 PRICES
   Consumer Price Index (1)                       Dec 2009       -0.3      0.9     -0.5     0.0        1.7        0.3         1.9       0.3        2.9
   Average Hourly Earnings (1)                    Jan 2010        0.3     -0.1      0.3    15.6        9.0        3.5         2.4       2.4        6.4
   Price of New Housing inc. Land (1)        *    Dec 2009        0.7      0.7      0.0     4.4        3.9       11.5         4.6      11.5       19.6
   Avg. Price of Existing Homes Sold (MLS)        Dec 2009        4.5      2.8     -0.6    14.5        6.6       15.2        11.2      15.2       19.9
 LABOR MARKET
   Job creation (000)                             Jan 2010        1.4      1.5      2.8     1.9        1.0        0.3         3.3       1.4       -1.2
   Unemployment                                   Jan 2010       14.9     15.2     15.7    15.3       15.7       15.6        14.6      14.9       14.6
   Participation rate                             Jan 2010       59.6     59.5     59.5    59.5       59.6       59.3        59.0      59.6       59.0

PRINCE EDWARD ISLAND
 DOMESTIC DEMAND AND REVENUE
   Retail Sales                                   Nov 2009        0.9     -2.5      4.3    14.2        5.4       -1.0        1.5       -1.1        6.2
   Manufacturing Shipments                        Nov 2009       -4.7      1.2      4.7    21.3       -5.6       -5.3        7.5       -4.6       -3.3
   Housing Starts (000) (2)                  *    Jan 2010        0.7      1.0      1.1     0.9        1.1        0.9        0.6        0.7        0.6
   Number of existing homes sold (MLS)            Dec 2009        7.0     -5.0      5.3    40.5      -10.3       -0.6       16.2       -0.6      -20.1
   W ages and Salaries                            Sep 2009       -0.1      0.1      1.5     2.1        6.2        4.4        4.9        4.7        3.7
   Value of merchandise exports (1)          *    Dec 2009      -14.3    -16.2     28.8    32.6        0.8       -1.8      -19.4       -1.8       10.6
   Number of personal bankrupties (1)             Nov 2009      -27.6     56.8     19.4    27.2       23.9       22.3        7.7       15.2       40.7
   Number of commercial bankrupties (1)           Nov 2009   #DIV/0!    -100.0     66.7   -59.0      300.0      107.7      200.0      100.0      -59.4
 PRICES
   Consumer Price Index (1)                       Dec 2009       -0.8      1.2     -0.8    -0.4         3.6       -0.1        3.0      -0.1        3.4
   Average Hourly Earnings (1)                    Jan 2010        2.3      3.8      0.1    20.4        -1.5        3.7        1.2       1.2        9.9
   Price of New Housing inc. Land (1)        *    Dec 2009        0.0      0.0     -0.7    -2.4         0.3        0.9        0.8       0.9        1.4
   Avg. Price of Existing Homes Sold (MLS)        Dec 2009      -10.1      2.2     -3.1   -13.6        -5.6        4.5      -17.7       4.5        4.8
 LABOR MARKET
   Job creation (000)                             Jan 2010        0.5     -0.2      0.8     0.4        0.4        0.3         3.6       0.5       -0.8
   Unemployment                                   Jan 2010        9.9     10.8     11.2    10.6       11.5       11.9        12.1       9.9       12.1
   Participation rate                             Jan 2010       68.4     68.6     69.1    68.7       68.4       68.2        67.2      68.4       67.2



                                                             February 12, 2010                                                                            11
                                                                                                                         WEEKLY ECONOMIC LETTER
                                                                                                             ECONOMIC TABLES

         Economic and Strategy Team
          TABLE 4 - PROVINCIAL ECONOMIC INDICATORS (Continues from page A4)
                                                                February 12, 2010
                                                                Monthly Growth (%)         Annualized Growth (%)                   Cumulated since
   Growth Rates Unless                           Reference      Past      Prev.   Month      Average of the last         Since     beginning of year
   Otherwise Indicated                           Period        Month     Month   Before   3 Mos.    6 Mos.     12 Mos.   12 Mos.       ref.      prec.


NOVA SCOTIA
 DOMESTIC DEMAND AND REVENUE
   Retail Sales                                   Nov 2009        0.8      1.0      1.6    13.3       11.0        -0.6       7.3      -0.4        5.0
   Manufacturing Shipments                        Nov 2009        1.7     -0.7      2.8     3.0        4.5       -16.4      -5.9     -16.6       10.2
   Housing Starts (000) (2)                  *    Jan 2010        2.7      3.0      2.8     2.8        3.9         3.4       2.4       2.7        2.4
   Number of existing homes sold (MLS)            Dec 2009        5.6     -5.5      7.5    20.2       31.3        -7.8      29.2      -7.8       -8.3
   W ages and Salaries                            Sep 2009        0.6      0.6      0.2     0.3        1.3         2.0       1.5       1.6        5.0
   Value of merchandise exports (1)          *    Dec 2009        5.8     -5.8     -6.9    -9.4       -8.0       -25.8     -25.7     -25.8        5.9
   Number of personal bankrupties (1)             Nov 2009      -17.1    -10.6     27.8    -6.9       39.8        18.0       8.9      15.9       11.3
   Number of commercial bankrupties (1)           Nov 2009      240.0    -28.6    -22.2   -72.4      -13.1       -13.9      88.9     -12.4      -20.7
 PRICES
   Consumer Price Index (1)                       Dec 2009       -0.6      0.9     -0.7    -0.9        2.8        -0.1       2.6      -0.1        3.0
   Average Hourly Earnings (1)                    Jan 2010        2.5      0.5      1.1    12.1        2.2         4.8       5.1       5.1        5.4
   Price of New Housing inc. Land (1)        *    Dec 2009        0.0      0.3      0.0     1.1        0.4         1.1       0.5       1.1        7.9
   Avg. Price of Existing Homes Sold (MLS)        Dec 2009        0.8     -0.1      1.1    11.7       10.4         3.2       8.0       3.2        5.0
 LABOR MARKET
   Job creation (000)                             Jan 2010       -5.0     -3.1      1.1    -2.3       -0.6       -0.5       -6.3      -5.0        0.1
   Unemployment                                   Jan 2010        9.8      9.6      9.5     9.6        9.5        9.3        8.9       9.8        8.9
   Participation rate                             Jan 2010       64.0     64.5     64.9    64.5       64.5       64.5       64.5      64.0       64.5

NEW BRUNSWICK
 DOMESTIC DEMAND AND REVENUE
   Retail Sales                                   Nov 2009       -1.0     -1.1      2.3    13.8        9.7        -0.8       4.1      -0.8        6.6
   Manufacturing Shipments                        Nov 2009       15.2      9.2    -26.1   -50.5       13.0       -24.3      20.4     -23.9       18.6
   Housing Starts (000) (2)                  *    Jan 2010        5.8      3.8      3.8     4.5        4.0         4.2       3.9       5.8        3.9
   Number of existing homes sold (MLS)            Dec 2009        2.5     10.0      0.4    16.7       14.8        -7.3      14.8      -7.3       -7.4
   W ages and Salaries                            Sep 2009        0.3     -0.2      1.4     4.5        2.5         2.2       2.2       1.8        5.4
   Value of merchandise exports (1)          *    Dec 2009       23.9     10.1     11.0   -16.6        3.1       -22.5      38.5     -22.5       14.5
   Number of personal bankrupties (1)             Nov 2009       -1.6    -35.4     17.4   -34.5       56.0        27.2       7.1      25.4        5.3
   Number of commercial bankrupties (1)           Nov 2009      -15.4     85.7     16.7   374.9      -19.6       -43.0      -8.3     -46.7       29.6
 PRICES
   Consumer Price Index (1)                       Dec 2009       -0.5      1.0     -0.2     1.1        3.0        0.3        3.0       0.3        1.7
   Average Hourly Earnings (1)                    Jan 2010        1.1      0.2      1.6     7.8        3.5        4.8        3.6       3.6        5.4
   Price of New Housing inc. Land (1)        *    Dec 2009        0.0      0.1      0.0     1.4        0.9        3.3        2.4       3.3        2.5
   Avg. Price of Existing Homes Sold (MLS)        Dec 2009        1.8     -0.6     -2.3    -0.5       12.2        6.2        4.6       6.2        6.6
 LABOR MARKET
   Job creation (000)                             Jan 2010       -0.9     -2.8     -1.8    -1.8       -0.1       -0.3       -3.4      -0.9       -0.2
   Unemployment                                   Jan 2010        9.3      8.9      8.7     9.0        8.7        8.9        8.8       9.3        8.8
   Participation rate                             Jan 2010       64.5     64.4     64.8    64.6       64.6       64.6       65.0      64.5       65.0

MANITOBA
 DOMESTIC DEMAND AND REVENUE
   Retail Sales                                   Nov 2009       -0.2      1.4      0.7     7.1        9.0        -1.7       1.9      -1.6         8.1
   Manufacturing Shipments                        Nov 2009       -2.9     -1.0      0.5    -9.8      -11.6       -10.0     -14.3     -10.9         1.4
   Housing Starts (000) (2)                  *    Jan 2010        5.1      3.3      4.3     4.2        4.7         4.2       3.1       5.1         3.1
   Number of existing homes sold (MLS)            Dec 2009        8.4      0.7      0.4    14.3       15.5        -3.2      22.8      -3.2        -2.9
   W ages and Salaries                            Sep 2009        0.9     -0.7      0.3    -1.7        0.7         2.7       1.2       2.0         6.2
   Value of merchandise exports (1)          *    Dec 2009       -2.2     -5.3      5.3    -0.2      -21.9       -17.8     -20.1     -17.8         6.4
   Number of personal bankrupties (1)             Nov 2009       -1.1    -12.1     -2.8   -44.8        1.5        23.9      11.8      23.1        -3.4
   Number of commercial bankrupties (1)           Nov 2009       66.7    -40.0    150.0   -25.7      -58.7       -31.0     -28.6     -36.6        -2.1
 PRICES
   Consumer Price Index (1)                       Dec 2009       -0.4      0.3     -0.1    -0.8        1.6        0.6        1.1       0.6        2.2
   Average Hourly Earnings (1)                    Jan 2010        0.1      0.6     -0.3     6.6        4.0        3.0        2.2       2.2        5.3
   Price of New Housing inc. Land (1)        *    Dec 2009        0.3      0.1      0.0     1.2        1.8        2.5        1.5       2.5       10.2
   Avg. Price of Existing Homes Sold (MLS)        Dec 2009       -6.3      4.5     -0.1     6.3       12.2        5.8       11.9       5.8       12.4
 LABOR MARKET
   Job creation (000)                             Jan 2010        8.4     -5.6      3.5     2.1        0.8        0.5        6.0       8.4       -2.5
   Unemployment                                   Jan 2010        5.4      5.8      5.3     5.5        5.6        5.3        4.6       5.4        4.6
   Participation rate                             Jan 2010       69.7     69.0     69.4    69.5       69.5       69.4       69.4      69.7       69.4

SASKATCHEWAN
 DOMESTIC DEMAND AND REVENUE
   Retail Sales                                   Nov 2009       -1.1      1.4     -0.6     1.9        4.9        -3.0      -1.7      -2.8       12.1
   Manufacturing Shipments                        Nov 2009        2.2    -12.3     11.6    -0.2        2.3       -11.4     -13.2     -12.0       21.2
   Housing Starts (000) (2)                  *    Jan 2010        6.3      4.3      7.6     6.1        5.3         4.2       2.0       6.3        2.0
   Number of existing homes sold (MLS)            Dec 2009       -0.2     -5.0     -0.6   -20.5       54.5         6.5      25.5       6.5      -15.4
   W ages and Salaries                            Sep 2009        1.5     -0.2      0.4     4.1        1.6         4.3       2.6       3.4        9.3
   Value of merchandise exports (1)          *    Dec 2009        5.9     -1.5      4.4    41.9        4.4       -26.4       3.2     -26.4       52.9
   Number of personal bankrupties (1)             Nov 2009       -7.8    -34.5     38.7   -30.3       22.2        24.4       4.4      24.1       -2.6
   Number of commercial bankrupties (1)           Nov 2009       75.0    -76.5     21.4   -83.6      -38.8        13.1     -30.0      10.4      -30.6
 PRICES
   Consumer Price Index (1)                       Dec 2009       -0.4      0.3     -0.3    -1.7        1.5         1.1       1.1       1.1        3.2
   Average Hourly Earnings (1)                    Jan 2010        0.6     -0.5      0.6     9.4        8.3         5.8       4.8       4.8        6.9
   Price of New Housing inc. Land (1)        *    Dec 2009        0.1      0.0      0.2     2.1        0.2        -1.4      -0.2      -1.4       23.3
   Avg. Price of Existing Homes Sold (MLS)        Dec 2009       -1.0      5.9     -1.0    25.5        9.4         3.6       6.8       3.6       29.2
 LABOR MARKET
   Job creation (000)                             Jan 2010       -2.3      1.2      1.1     0.0        0.2       -0.1       -1.2      -2.3        1.3
   Unemployment                                   Jan 2010        4.7      4.8      5.1     4.9        4.9        4.8        4.2       4.7        4.2
   Participation rate                             Jan 2010       69.5     69.9     70.0    69.8       69.8       70.1       70.2      69.5       70.2




                                                             February 12, 2010                                                                           12
                                                                                                                     WEEKLY ECONOMIC LETTER
                                                                                                        ECONOMIC TABLES

         Economic and Strategy Team
          TABLE 4 - PROVINCIAL ECONOMIC INDICATORS (Continues from page A5)
                                                                February 12, 2010
                                                                Monthly Growth (%)         Annualized Growth (%)               Cumulated since
   Growth Rates Unless                           Reference      Past      Prev.   Month      Average of the last     Since     beginning of year
   Otherwise Indicated                           Period        Month     Month   Before   3 Mos.    6 Mos. 12 Mos.   12 Mos.       ref.      prec.

ALBERTA
 DOMESTIC DEMAND AND REVENUE
   Retail Sales                                   Nov 2009      -0.8       0.5      0.1    -1.1     -1.0      -9.4      -6.7      -9.4        0.7
   Manufacturing Shipments                        Nov 2009       1.4       3.2      0.9    22.7     -6.5     -21.8     -13.4     -22.7        8.6
   Housing Starts (000) (2)                  *    Jan 2010      23.6      27.3     30.2    27.0     26.1      20.7      15.6      23.6       15.6
   Number of existing homes sold (MLS)            Dec 2009      -7.6      -2.9      4.0    -3.9     67.5       2.5      60.3       2.5      -21.0
   Wages and Salaries                             Sep 2009       0.5      -0.9     -0.5    -4.1     -3.1       3.1      -2.0       1.6        9.1
   Value of merchandise exports (1)          *    Dec 2009      13.5      -1.2      0.8     0.2     13.8     -37.3     -14.1     -37.3       35.0
   Number of personal bankrupties (1)             Nov 2009      -0.6     -40.7     31.9   -29.9     30.9      73.1      15.3      71.3       22.0
   Number of commercial bankrupties (1)           Nov 2009      -3.0      -5.7      6.1    -3.9     -1.0      -9.2     -28.9     -10.6       -1.2
 PRICES
   Consumer Price Index (1)                       Dec 2009       -0.6      0.8      0.1    1.2        1.3     -0.1       0.6      -0.1         3.2
   Average Hourly Earnings (1)                    Jan 2010        1.3     -1.0     -0.3   -0.4        5.1      3.9       1.1       1.1         6.2
   Price of New Housing inc. Land (1)        *    Dec 2009        0.0      0.2      0.0    1.3       -2.4     -8.9      -6.3      -8.9         0.7
   Avg. Price of Existing Homes Sold (MLS)        Dec 2009        3.4      0.9      3.2   25.8        7.1     -3.3       7.9      -3.3        -1.5
 LABOR MARKET
   Job creation (000)                             Jan 2010      -7.7       7.5     12.7    4.2       0.5      -2.7     -31.9      -7.7        4.2
   Unemployment                                   Jan 2010       6.6       6.6      7.1    6.8       6.9       6.7       4.7       6.6        4.7
   Participation rate                             Jan 2010      73.4      73.8     74.0   73.7      73.8      74.2      74.9      73.4       74.9

BRITISH COLUMBIA
 DOMESTIC DEMAND AND REVENUE
   Retail Sales                                   Nov 2009        0.6      1.6      1.7    17.0      9.6      -6.6       2.9      -6.1        1.5
   Manufacturing Shipments                        Nov 2009       -0.8      1.2      2.3    15.0     -0.8     -17.9     -13.2     -18.5       -6.1
   Housing Starts (000) (2)                  *    Jan 2010       27.5     23.0     20.4    23.6     21.5      17.1      14.6      27.5       14.6
   Number of existing homes sold (MLS)            Dec 2009        0.7     -1.1      7.1    54.9    173.7      23.4     132.4      23.4      -33.0
   Wages and Salaries                             Sep 2009        0.5      0.0      0.2    -0.5     -4.1      -0.5      -2.8      -1.8        6.0
   Value of merchandise exports (1)          *    Dec 2009        7.3     -5.4      8.0    -4.9      0.3     -24.3     -13.4     -24.3        5.2
   Number of personal bankrupties (1)             Nov 2009       -2.0    -27.1     33.3    -7.7     13.6      49.6      10.8      50.2        7.1
   Number of commercial bankrupties (1)           Nov 2009      -29.6    -10.0     25.0   -65.3    -40.0     -11.1     -36.7     -12.8       -4.4
 PRICES
   Consumer Price Index (1)                       Dec 2009       -0.4      0.3     -0.5   -1.8       0.4       0.0       0.4       0.0        2.1
   Average Hourly Earnings (1)                    Jan 2010        0.0      1.3     -0.5    4.9       2.7       3.3       1.8       1.8        4.3
   Price of New Housing inc. Land (1)        *    Dec 2009        0.6      0.3      0.6    7.7       0.4      -6.5      -2.8      -6.5        2.1
   Avg. Price of Existing Homes Sold (MLS)        Dec 2009        2.1      2.3      0.7   18.4      25.2       1.8      21.3       1.8        2.5
 LABOR MARKET
   Job creation (000)                             Jan 2010      12.0      -4.5     11.3    6.3       5.4       1.1      13.3      12.0      -28.1
   Unemployment                                   Jan 2010       8.1       8.3      8.0    8.1       7.9       7.8       6.3       8.1        6.3
   Participation rate                             Jan 2010      66.3      66.1     66.1   66.2      66.1      66.0      65.8      66.3       65.8




                                                             February 12, 2010                                                                       13
                                                                                                                               WEEKLY ECONOMIC LETTER
                                                                                                               ECONOMIC TABLES

          Economic and Strategy Team
                              TABLE 5 - INTERNATIONAL ECONOMIC INDICATORS
                                                     February 12, 2010
                                                               Monthly Growth (%)              Annualized Growth (%)                      Cumulated since
   Growth Rates Unless                        Reference        Past      Prev.   Month           Average of the last           Since      beginning of year
   Otherwise Indicated                        Period          Month     Month   Before        3 Mos.    6 Mos.     12 Mos.     12 Mos.        ref.      prec.

 OECD leading index                            Dec 2009          0.7        0.7       0.9      11.0        12.4        -3.9        8.3       -3.9        -5.1

JAPAN
 Consumer confidence - percenbtage (1)    *    Jan 2010        39.0         37.6    39.5    38.7           39.5        36.5      26.4       39.0        26.4
 Retail Sales (1)                              Dec 2009        17.8          1.9      2.6   30.5            8.1        -2.3       -0.3       -2.3         0.3
 Industrial Production, Volume Index           Dec 2009          2.2         2.2     0.5    20.1           30.7       -22.3        5.4     -22.3         -3.4
 Exports                                       Dec 2009          2.5         4.7     4.3    47.1           28.1       -33.3      11.0      -33.3         -3.5
 Imports                                       Dec 2009          2.6         4.6     1.0    30.1            7.5       -34.8       -4.2     -34.8          7.8
 Merchandise trade bal. (Billions of ¥)        Dec 2009         523          517     487     509           422          221      -195      2,647       2,282
 Current account (Billions of ¥)          *    Dec 2009       1,101       1,305   1,376   1,261          1,264       1,111        592     13,327      16,425
 Inflation (CPI)                               Dec 2009         -0.1         0.2    -0.3    -1.3           -1.8        -1.4       -1.7       -1.4         1.4
 Job offers to applicants ratio                Dec 2009        0.46        0.45     0.44    0.45           0.44        0.48      0.73       0.48        0.88
 Unemployment Rate                             Dec 2009          5.1         5.2      5.1    5.1            5.3          5.1       4.3        5.1         4.0
                                                            Q3 2009     Q2 2009 Q1 2009 Q4 2008        Q3 2008     Q2 2008       2008       2007        2006
 Gross Domestic Product (Constant Yen)                           1.3         2.7   -11.9   -10.2           -4.0        -8.1       -1.2        2.3         2.0

Euro-zone
 Volume Retail Sales                           Dec 2009          0.0        -0.5     0.4    -1.0           -1.1        -2.5        -1.6      -2.5        -5.3
 Industrial Production                         Nov 2009          1.0        -0.2     0.2     5.4            2.0       -15.5        -7.6    -15.7         -0.7
 Exports                                       Nov 2009         -0.4        -0.1     4.5   12.0             2.1       -18.4        -8.8    -19.4          4.4
 Imports                                       Nov 2009          0.3        -1.0     2.7     7.9           -7.3       -20.5      -15.8     -21.7          8.8
 Merch. Trade Bal. (Millions of euros)         Nov 2009       3,926       4,726   3,774   4,142          3,470       3,758       3,079    13,064     -25,059
 Inflation (CPI)                               Jan 2010         -0.8         0.3     0.1     1.0            0.7         0.3         1.0       1.0         1.1
 Unemployment Rate                             Dec 2009        10.0          9.9     9.9     9.9            9.8         9.4         8.2       9.4         7.5
                                                            Q4 2009     Q3 2009 Q2 2009 Q1 2009        Q4 2008     Q3 2008        2009      2008        2007
 Gross Domestic Product (Constant Euro)   *                      0.4         1.7    -0.5    -9.5           -7.4        -1.6        -4.0       0.6         2.7

UNITED KINGDOM
 Consumer Confidence (Diffusion index)         Jan 2010            -5        -10        -8        -8         -10         -16        -35         -5        -35
 Retail Sales                                  Dec 2009           0.4       -0.3       0.5      2.9          3.7         1.6        2.1        1.6        2.7
 Industrial Production                    *    Dec 2009           0.5        0.3       0.0      1.7         -2.0      -10.2        -3.6     -10.2        -3.1
 Exports (1)                              *    Dec 2009           4.5       -0.5       3.9     35.4        13.2         -9.5        7.7       -9.5      13.9
 Imports (1)                              *    Dec 2009           5.2       -1.8       3.5     34.2        10.2       -10.3         6.1     -10.3       11.1
 Merchandise Trade Bal. (Millions of £)   *    Dec 2009       -7,278     -6,798    -7,200    -7,092      -7,006      -6,830     -6,630    -81,901    -93,381
 Inflation (CPI harmonized) (1)                Dec 2009           0.5        0.3       0.2      3.0          3.1         2.2        2.8        2.2        3.6
 Industrial Prices (1)                         Jan 2010           0.4        0.5       0.3       4.5         3.9         1.3        3.8        3.8        3.5
 House prices                                  Jan 2010           0.6        0.8       1.3     13.9        10.3         -8.2        3.6        3.6     -16.5
 Unemployment Rate                             Oct 2009           7.8        7.9       7.8       7.8         7.8         7.4        6.2        7.5        5.6

                                                            Q4 2009     Q3 2009 Q2 2009 Q1 2009        Q4 2008     Q3 2008       2009       2008        2007
 Gross Domestic Product (Constant £)                            0.4         -0.6    -2.7    -9.7           -7.0        -9.7       -4.8       0.5         2.6

INTEREST AND EXCHANGE RATES
                                              Reference      Current      Prev.    Week       Average of last Thurdays           13 w.      26 w.      52 w.
                                              Thursday        Week        Week     Before    13 W.       26 W.      52 W.         ago        ago        ago

JAPAN
 Prime Rate                               *    11-Feb-10        0.30       0.30      0.30      0.30        0.30        0.30       0.30       0.30       0.30
 3-month Financing Bill Rate              *    11-Feb-10        0.12       0.12      0.12      0.12        0.14        0.16       0.15       0.14       0.24
    - Spread with U.S.                    *    11-Feb-10        0.01       0.03      0.04      0.07        0.06        0.04       0.08      -0.03      -0.06
 Yield on 10-year Gov't Bonds             *    11-Feb-10        1.32       1.37      1.31      1.30        1.31        1.35       1.37       1.41       1.26
    - Spread with U.S.                    *    11-Feb-10       -2.37      -2.24     -2.33     -2.30       -2.18       -2.03      -2.08      -2.19      -1.44
 Exchange Rate (¥/U.S.$)                  *    11-Feb-10         0.9        0.9       0.9       0.9         0.9         0.9        0.9        1.0        0.9

Euro Zone
 3-month Treasury Bills                   *    11-Feb-10       0.60        0.61      0.61      0.65        0.68        0.99       0.67      0.84        1.96
    - Spread with U.S.                    *    11-Feb-10       0.49        0.52      0.53      0.59        0.61        0.86       0.60      0.67        1.67
 Yield on 10-year Gov't Bonds             *    11-Feb-10       3.20        3.20      3.20      3.22        3.25        3.27       3.28      3.48        3.34
    - Spread with U.S.                    *    11-Feb-10      -0.49       -0.41     -0.44     -0.37       -0.25       -0.11      -0.16     -0.11        0.65
 Exchange Rate         (U.S.$/Euro)       *    11-Feb-10       1.37        1.37      1.40      1.44        1.45        1.41       1.48      1.43        1.29
                       (Yen/Euro)         *    11-Feb-10     123.03      125.68    126.36    130.05      131.88      131.77     134.32    137.52      115.46
                       (Euro / £ )        *    11-Feb-10       1.14        1.15      1.16      1.12        1.12        1.13       1.11      1.16        1.11

UNITED KINGDOM
 Prime Rate                               *    11-Feb-10        6.50       6.50      6.50      6.50        6.50        6.50       6.50       6.50       6.50
 3-month Treasury Bills (tender)          *    11-Feb-10        0.49       0.49      0.49      0.47        0.44        0.50       0.45       0.45       0.87
    - Spread with U.S.                    *    11-Feb-10        0.38       0.40      0.41      0.42        0.36        0.37       0.38       0.28       0.58
 Yield on 30-year Gov't Bonds             *    11-Feb-10        4.53       4.39      4.42      4.36        4.27        4.33       4.29       4.28       4.08
    - Spread with U.S.                    *    11-Feb-10       -0.11      -0.17     -0.13     -0.16       -0.11        0.08      -0.10      -0.14       0.62
 Exchange Rate (U.S.$ / £ )               *    11-Feb-10        1.57       1.58      1.61      1.62        1.63        1.58       1.66       1.66       1.43

STOCK INDICES                                                             Monthly Growth (%)                  Growth Over (%)                  Since
                                                                          Past     Prev.   Month                                          beginning of year
                                              Reference        Level     Month    Month    Before      3 Months    6 Months     1 Year        ref.      prec.

 MSCI Eafe                                *    Feb 2010         202        -4.9       2.7       4.3         1.8         5.4       38.1       -2.4        -5.5




                                                           February 12, 2010                                                                                    14
                                                                                                      WEEKLY ECONOMIC LETTER
                                                                                           ECONOMIC TABLES

                                   TABLE 6 - COMMODITY PRICES
                                                   February 12, 2010
                                     Spot Price             Weekly Growth (%)        Annualized Growth (%)
                                                          Last    Prev.    Week               For the Last            Last
                                    Feb 11    Feb 4       Week    Week     Before     13 W.     26 W.      52 W.      Year



CRB Index
 Total                               470.9        461.6      2.0     -1.7     -3.3       13.6      22.2      30.3     361.3

 Energy                              626.8        617.9      1.5      1.7     -4.5       11.5      17.4      44.5     433.9
 Grain                               304.2        295.0      3.1     -1.9     -2.4      -23.3       5.9      -3.4     315.0
 Industrials                         440.4        412.0      6.9     -3.7     -4.7       26.7      21.8      79.7     245.1
 Livestock & Meat                    304.3        298.0      2.1     -0.4     -2.5       61.3      54.0       3.6     293.7
 Precious Metals                     854.1        840.5      1.6     -2.0     -5.1       -0.8      26.3      23.2     693.3


PRECIOUS METALS
 Gold ($/ounce)                    1079.50 1102.50          -2.1      1.0     -1.1      -12.5      27.5      14.4    944.00
 (AM fixing London)
 Platinum ($/ounce)                 1516.0    1550.0        -2.2      2.2     -5.4       51.3      44.8      39.9    1084.0
 (AM fixing London)
 Silver ($/ounce)                     15.6         15.5      0.8     -5.2     -6.8      -33.3       8.1      15.5      13.5
 (Handy & Harman)
 Palladium ($/ounce troy)            418.0        431.0     -3.0      1.2     -7.8       93.3    131.0     104.9      204.0

OTHER METALS (LME)
 Aluminum ($/tonne)                  2,012        2,052     -1.9     -3.5     -4.6       21.2      -2.2      50.1     1,341
 Copper ($/tonne)                    6,672        6,571      1.5     -6.7     -4.1       12.9       8.1      99.2     3,350
 Zinc ($/tonne)                      2,153        2,082      3.4     -3.4   -12.0         4.2      28.8      92.0     1,121
 Nickel ($/tonne)                   17,943    18,253        -1.7      0.6     -3.5       45.8     -27.5      77.1    10,133
 Lead ($/tonne)                      2,063        2,003      3.0     -4.2     -8.1      -29.5      19.6      81.9     1,134
 Uranium (Neuxco spot $/lb U308)         0            0 #DIV/0! #DIV/0! #DIV/0!      #DIV/0! #DIV/0! #######        $$"ER", E

OTHER COMMODITIES
 Oil ($/barrel) 1-month future       75.13        72.93      3.0     -1.3     -2.3       -8.1      11.9    121.0      33.99
 (West Texas Intermediate)
 Corn (¢/bushel)                     338.0        327.0      3.4     -1.5     -2.4      -25.2      12.3      -2.9     348.0
 (Illinois #2)
 Soy beans (¢/bushel)                923.5        893.0      3.4     -1.7     -2.0      -17.0     -33.6      -3.2     954.5
 (Illinois #1)
 Pork (¢/lb)                          89.0         89.0      0.0      0.0     0.0      133.5     120.0       20.3      74.0
 Beef (Cattle feeder index)           99.5         98.4      1.1      1.2     0.0        27.9      -1.9       4.9      94.8
 (CME)
 Woodpulp NBSK                        850          850       0.0      2.4     0.0        27.4      51.8      25.0       680
 Metric ton delivered in U.S.
 Natural Gas (mmbtu)                  5.51         5.44      1.3      2.9     -4.4     775.8     171.7       17.4      4.69
 Henry Hub future NYMEX
 Lumber 2X4                           290          252      15.1      0.8     0.0      420.5     100.1       70.6       170




                                        All prices are in US dollars



                                             February 12, 2010                                                                  15

				
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