Canada’s trade surplus increased by $78 million in March, over February.  That comes despite a decrease in exports; imports also declined.  Exports to the United States fell 2.1%, the third consecutive monthly decrease.  Imports also dropped leaving Canada with a trade surplus with the U.S. of $4.6 billion in March, down $300 million from February.

In the U.S. the overall international trade deficit increased to $51.8 billion in March from $45.4 billion (revised) in February, based on a greater increase in imports than exports.

In Europe, the Bank of England is pausing its bond-buying stimulus program.  Worries about a stubbornly high annual rate of inflation are bigger than concerns that the U.K. slid back into recession in the first quarter. 

And back here, Canada’s new home price index was up 0.3% in March, led by increases in Calgary Edmonton and Toronto.  Y/Y the index is up 2.6%. 

Given the light load of economic data coming out of North America, the turmoil in Europe remains in the cross-hairs.  Greece continues to wrestle with the process of forming a government.  The chances of that remain remote, so another trip to the polls is the most likely development.  Even so, Greeks have made it clear austerity won’t win an election and the prospect of a default and an exit from the euro has the markets jittery.

Spain’s latest efforts to buttress its financial system aren’t inspiring much confidence.  It’s expected banks will be told to put aside another 35 billion euros to protect against bad loans to the building sector.  But lenders are already trying to write down 45 billion in property losses.  The gap has triggered concerns about an international bail-out.

U.S. wholesale trade figures show sales crept up 0.5% in March, from a modestly, downwardly, revised February number.  Sales of durable goods declined 0.6%.  Y/Y the March sales numbers are up 6.5%.  Inventory figures for the month were up 0.3% from February and 5.1% Y/Y.

Canadian housing starts surged past expectations in April, jumping up by 14% over March.  Multiple units led the way.  The latest CMHC figures show housing starts at a seasonally adjusted, annualized rate of 244,900 units, compared with 214,800 in March. The March figure was revised down by 800 units.  The April forecast had been for 202,000 starts.

The markets appear to be trying, at least, to put on a brave face as they stare into the abyss of another possible collapse in Greece.  The New Democracy Party, which took the most votes in the weekend election, hasn’t been able to hammer out a coalition government.  The second place finishers, known as the Radical Left Coalition, or Syriza, now get a chance.  Bond yields are marching upwards in Greece, Spain and Portugal.  Short term treasuries in Greece are now paying 4.69% interest, compared to 4.55% last month. 

All eyes are on Europe, and it’s an un-nerving scene for markets that hate uncertainty.  The austerity minded French president has been replaced by a Socialist who wants stimulus and growth.  And austerity-weary voters have punished the mainstream parties in Greece.  

In France, the new president’s scheme to boost growth remains unknown.  It’s also unknown whether next month’s legislative elections will give Socialists complete control of the government.  That will greatly influence how much the new president will actually be able to do.  In Greece there’s no clear winner and little chance of a workable coalition.  That sets the stage for another general election within the next couple of months.

In Canada the total value of building permits made an unexpected gain in March, but the rate of increase slowed.   The 4.7% increase was driven by a, nearly, 14% boost in non-residential permits.  The value of residential building permits actually dropped 1.3%, the third consecutive monthly decline.

The highly anticipated report on April’s U.S. non-farm payrolls is out and it missed expectations.  It grew by 115,000 jobs last month, coming in some 45,000 short.  Still, the unemployment rate slipped to 8.1%, down 0.1% from March.  The March payroll number was revised upward by about 34,000, taking some of the sting out of the April figures.  Analysts say slowing job growth in the U.S. now, more closely, matches growth in the overall economy.   

The latest read on the economic health of the Eurozone reveals a wasting service sector.  The final reading of April’s Markit Eurozone Services PMI came in at 46.9, a full point lower than the preliminary reading reported two weeks ago and a sharp drop from the 49.2 reading in March.  Any figure below 50 signifies contraction.

The European Central Bank steps back and stands pat.  It is holding its benchmark interest rate at a record low 1% and resisting calls for action to ease the continent’s debt crisis.  The markets want the ECB to buy up Spanish bonds, lowering borrowing costs for the recession plagued nation.  Instead, bank president Mario Draghi repeated his call for Eurozone governments to implement growth strategies in conjunction with, already agreed to, austerity measures.

In the U.S., more evidence of slowing economic growth.  The Institute of Supply Management’s Non-manufacturing Index declined by 2.5 percentage points in April, dropping to 53.5% from 56% in March.  The Business Activity, New Orders, Employment and Price indices all showed contractions in April, but remained above the 50% threshold, indicating growth.

It’s all about jobs today, and the outlook in the U.S. is a little gloomier.  Private payroll processor ADP says private sector hiring missed expectations for April.  About 119,000 jobs were added, nearly 50,000 fewer than predicted.  It’s seen as a sign U.S. economic growth is slowing.  The markets appear to be waiting for the U.S. Labor Department’s numbers on Friday.

Adding to the gloom is a sharp drop in U.S. factory orders.  The Commerce Department says demand for manufactured goods fell 1.5% in March, led by a 4% decline for durable goods.  Non-defense capital goods orders excluding aircraft – seen as a measure for business capital spending – were 0.1% lower. 

And the downward spiral continues in Europe.  The Eurozone jobless rate hit a record 10.9% in March, the highest rate since the launch of the Euro in 1999.  The number is up from 10.8% in February and from 9.9% Y/Y.  Unemployment in the broader, 27-member, European Union was unchanged from February at 10.2%, but up from 9.4% Y/Y.

The job numbers and the fact that nearly half of the Eurozone is in recession, have triggered growing demands for a change in strategy – away from austerity and toward growth – in the debt fight.  The Socialist candidate in France’s presidential race has already said that’s what he’ll do.  The French vote on Sunday.

The Institute for Supply Management says U.S. manufacturing activity expanded in April for the 33rd month in a row.  The group’s Purchasing Managers’ Index came in at 54.8% last month, up 1.4 percentage points from March.  The unexpected jump comes with 16 of 18 industries surveyed showing growth.  Stronger demand for automobiles gets the credit.

Construction spending in the U.S. barely moved in March, edging up just 0.1%.  The Commerce Department revised its February figures down to show a 1.4% drop in February.  The main drag has been a decline in public projects.  The weak figures may force the U.S. government to lower estimates for Q1 growth.

Canadian GDP crept downward 0.2% in February missing expectations for a 0.2% increase.  The decline  will likely hold Q1 growth well below the Bank of Canada’s 2.5% projection.  It could force the central bank to hold off on expected interest rates hikes later this year.  Most of the weakness occurred in mining and oil and gas extraction.  Strong points included construction and real estate.

A key driver of the American economy, consumer spending, slowed last month for an increase of just 0.3%, following a 0.9% jump in February.  While incomes were up 0.4% the March deceleration suggests Americans don’t feel their pay cheques are keeping pace.  U.S. consumer spending was up 2.9% for Q1.

And in Europe, the news keeps getting worse in Spain.  The country has joined Britain in a double-dip recession.  The Eurozone’s 4th largest economy is struggling with massive public debt and a banking system that has been battered by a four  year economic slump and a burst property bubble. 

U.S. GDP for Q1 increased, but more slowly than for the same period a year ago.  It’s the 11th consecutive quarter of expansion.  The American economy grew 2.2% from January to March, compared to a 3% increase last year.  

Government spending was down and so was business investment, which trailed-off at an annualized rate of 2.1%.

Consumer spending was up and so is sentiment.  The University of Michigan’s Index put April’s final figure at its highest level in a year – 76.4, up from 76.2 in March.  An easing of gasoline prices and ongoing optimism about employment get the credit.  However, yesterday’s very modest decline in initial jobless claims (down just 1,000) is held up as another sign the U.S. recovery is weakening.

And a couple of downgrades have sent ripples through the bond market.  Both the province of Ontario and Spain have had their ratings cut.  Ontario’s yields increased as, mainly, foreign investors cashed-in their holdings.  Spain’s rating was cut back two notches yesterday.  Today the government revealed that unemployment hit 24.4% in Q1.