Table of Contents
Executive Summary—Economic Growth Trends for 2015
•The US economy is expected to grow by x % in 2015, up from a x % in 2014. For Canada, the outlook has been scaled back to x % in 2015 due to falling oil prices, which will lead to lower corporate profits and weaker income growth.
•A combination of falling energy prices and a rising US dollar will hold down inflation in 2015. From an average of x % in 2014, Consumer Price Index (CPI) inflation is expected to fall to x % in 2015 in the US. In Canada, headline inflation is expected to move along with oil prices, while core inflation is likely to remain near x %.
•In 2015 growth in US will be driven by rising income, repressed demand, a strengthening housing sector, and lower oil prices. In Canada, the key driver will be international trade, as exports will continue to receive a boost from a weak Canadian dollar and the accelerating pace of the US economy.
North America Highlights
The economy will be a victim to falling oil prices, as lower profits in the oil sector will weigh on production growth and the overall business investment in 2015. However, economic growth will be supported by external demand, as trade balance continues to improve and household spending improves against a backdrop of falling consumer prices.
The US economy saw robust growth in Q2 and Q3 2014 after the setback in the first quarter. With job growth accelerating and wages rising, 2015 looks even better. Consumer spending and business investment will lead the way in 2015 taking growth to x % through the year.
North America Growth Sentiment
•In the first half of 2015, corporate profits are expected to decline due to the recent fall in oil prices. This will translate into weaker capital spending, especially in the energy sector. However, Canada’s export sector is forecasted to remain strong as a result of a weaker Loonie combined with sustained strength in US demand. This kind of an export scenario along with cheaper energy inputs will help the manufacturing sector register growth from H2 2015 onward.
•The GDP of the US economy is expected to rise to x % in 2015, up from x % in 2014. The improvement in economic growth reflects strengthening domestic fundamentals such as escalating confidence, robust job growth, rising wages, and falling energy prices. This is set against a weaker global backdrop and rising US dollar that will keep the nation’s exporters under pressure. Manufacturing revenue is expected to increase in x different manufacturing industries in 2015. Capital expenditure, a major driver in the US economy, is expected to increase by x % in the manufacturing sector. This momentum, will help the industry outpace the GDP growth in 2015.
North America Industry Outlook—2015
•In US, the manufacturing sector has been the single largest contributor to total economic growth since 2009. The outlook for 2015 and beyond is positive and this scenario is much better than past decades. Regional companies will be focused on a more skilled workforce, access to distribution channels, and highly automated processes.
•Strong agriculture and automotive sectors augur well for the chemical industry. A gradually improving housing market also bodes well for recovery prospects of the industry in 2015 and 2016.
•North American energy renaissance, driven by the shale revolution, is facing its first major challenge. West Texas Intermediate and Brent prices fell by more than x % between July and December 2014. This is expected to postpone new shale and deep-water projects of higher cost planned in the region.
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