Although we had hoped the Canadian economy would sustain its first-quarter momentum, thus far the second-quarter’s performance has been somewhat disappointing.

Fortunately, equity markets don’t always march in lockstep with the economy. In fact, Canada’s stock market, as gauged by the performance of the S&P/TSX Composite Index (SPTSX), has generated a very respectable total return of 12.8 percent so far this year.

That compares quite favorably with the S&P 500’s 7.6 percent return. And even in US dollar terms, the SPTSX is still ahead of the S&P by 4.1 percentage points.

Still, it’s our task to delve into the data, even if they’re not nearly as rosy as the stock market’s performance.

Gross domestic product (GDP) grew 0.1 percent month over month in April, falling short of the consensus forecast by a tenth of a percentage point. On a year-over-year basis, the economy grew by 2.1 percent.

While the output from service-oriented industries increased by 0.3 percent, as the result of wholesale and retail trade, output from goods-producing industries fell by 0.3 percent due to declines in all major industries, even the resource sector, with manufacturing the only area that eked out a gain.

Still, the pickup in manufacturing could suggest the economy produced a stronger performance as the quarter progressed. During April, the sector’s real output was up 2.8 percent from a year ago. And April was the fourth consecutive month in which manufacturing output rose.

At the subsector level, durable-goods manufacturing was up 0.4 percent, as a result of gains in fabricated metal products, computer and electronics products, and machinery, while non-durable goods manufacturing was unchanged.

The Bank of Canada (BoC) has been hoping its policymaking would help foster a rebound in manufacturing, so we’ve been watching this beleaguered sector closely.

On the service-sector side, the increase in wholesale trade was led by increases in sales of machinery, equipment and supplies, which suggests businesses may be investing for future growth.

On a year-over-year basis, the industry with the strongest growth continues to be mining, quarrying and oil and gas extraction, which was still up 6.0 percent from a year ago despite a decline in April. The latter was partly due to the temporary idling of a number of refineries for maintenance.

Based on April’s performance, economists with CIBC World Markets believe second-quarter GDP grew at a rate closer to 2 percent than the BoC’s previously forecast 2.5 percent. The consensus among private-sector economists is that the economy grew at a 2.2 percent pace during the second quarter.

As for full-year 2014, according to Bloomberg, the consensus forecast among economists is for GDP to grow 2.2 percent, which is only slightly faster than the 2.0 percent pace last year. But at least for this year, that gives Canada bragging rights over the US, whose economy is expected to grow at a comparatively tepid 1.7 percent.

The BoC previously identified a GDP growth rate of 2.5 percent as the minimum threshold necessary to remove excess capacity from the country’s economy. Economists expect the economy to hit that pace in 2015 and sustain it through the following year.

Help Not Wanted

Canada’s job market continued to produce lumpy month-to-month figures for the eighth consecutive month. After May’s gain of 25,800 jobs, employment fell by 9,400 in June, missing the consensus forecast by a wide margin. Economists had expected the economy to add 20,000 jobs last month.

The unemployment rate increased to 7.1 percent, while the labor force participation rate fell to a 12-year low of 66.1 percent.

The one kernel of good news is that full-time employment grew by 33,500 positions, offsetting a decline of 29,100 in the previous month. This was welcome relief since prior to June the economy had only added 22,000 full-time jobs altogether.

Meanwhile, part-time employment fell by 43,000 jobs, not quite undoing May’s gain of 54,900 jobs.

Over the trailing six-month period, Canada’s economy has created an average of 8,800 jobs per month. That’s a marked deceleration from the 14,400 jobs created per month over the past three years.

And the number of hours worked, which can indicate future labor demand, don’t augur a near-time lift in employment. Hours worked declined by 0.4 percent month over month in June, for an overall decline of 1.2 percent for the second quarter. Again, that’s not a promising sign for second-quarter growth.

In light of weak employment numbers, the exchange rate dipped slightly from the year-to-date high posted earlier this month. The Canadian dollar currently trades near USD0.932, up about 4.7 percent from its year-to-date low in late March, but still down about 12.1 percent from the cycle high in mid-2011.

Though an even lower exchange rate could help boost export activity, as well as the economy overall, the consensus forecast is for the loonie to trade between USD0.90 and USD0.91 through at least 2018.

At the same time, the BoC is likely to maintain an accommodative stance with its monetary policy, which should help support the economy while undercutting support for the loonie.

Despite these gloomy economic data, there are pockets of strength, particularly in resources, which is one of the major reasons we’re invested in Canada in the first place.

Bay Street Beat

Although the second quarter is officially over, we’re still waiting for nearly all of our companies to report earnings. While many ratings and even price targets have remained static since last month, there have been a handful of noteworthy changes during this otherwise quiet period.

GMP lowered its rating for Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF) to “hold” from “buy” due to price appreciation closing the gap with the firm’s net asset value (NAV). GMP’s 12-month target price remains CAD24.50.

Nevertheless, the overall mix of analyst sentiment is still strongly bullish, at eight “buys” and three “holds.” The consensus 12-month target price is CAD24.44, which suggests potential appreciation of 6.7 percent above the current unit price.

GMP also cut its rating for Northern Property REIT (TSX: NPR-U, OTC: NPRUF) to “hold” from “buy,” as price appreciation has brought the REIT’s units in line with its NAV, while growth in near-term net operating income (NOI) is expected to slow.

The brokerage also lowered its 12-month target price to CAD31.00 from CAD32.00, though it notes that the new level still reflects a 7.5 percent premium to the NAV.

The mix of analyst sentiment is now slightly more neutral, at three “buys” and six “holds.” The consensus 12-month target price is CAD30.75, which suggests potential appreciation of 6.1 percent above the current unit price.

Raymond James lowered its rating for RioCan REIT (TSX: REI-U, OTC: RIOCF) to “market perform,” which is equivalent to a “hold,” from “buy” because it believes the REIT looks “expensive” on an adjusted funds from operations (AFFO) basis.

The mix of analyst sentiment is now neutral, though with a strong bullish tilt, at four “buys” and five “holds.” The consensus 12-month target price is CAD29.69, which suggests potential appreciation of 10.2 percent above the current unit price.

Shaw Communications Inc’s (TSX: SJR/B, NYSE: SJR) fiscal third-quarter results beat analyst estimates for earnings per share by 11.1 percent, but fell short on sales by 1.3 percent.

In response, two brokerages boosted their ratings. Canaccord Genuity Corp raised its rating to “hold” from “sell,” and also increased its 12-month target price to CAD26.00 from CAD24.00.

And TD Securities upped its rating to “buy” from “hold,” while also raising its 12-month target price to CAD30.00 from CAD29.00.

The mix of analyst sentiment remains largely neutral, at four “buys,” 12 “holds,” and three “sells.” The consensus 12-month target price is CAD26.63, which is actually 3.2 percent below the current share price.

The dramatic increase in Enerplus Corp’s (TSX: ERF, NYSE: ERF) contingent resources, which we first reported late last month in Maple Leaf Memo, has resulted in a sharp rise in analysts’ target prices.

The consensus 12-month target price now stands at CAD29.20, up from CAD26.65 a month ago, and suggests potential appreciation of 16.0 percent above the current share price.

The mix of analyst sentiment is also strongly bullish, at 15 “buys” and four “holds.”

In the listing below, the number of analyst “buy,” “hold” and “sell” ratings for each company are shown, followed by the average 12-month target price among the analysts for which we have access to such data.

Month-over-month variances in the number of analysts listed below for each stock are often due to those securities being on a brokerage’s restricted list for a brief period. A restricted list is a compliance measure that’s typically used during the period when the investment banking side of an analyst’s firm is involved in advising the company.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–5–3–1 (CAD51.50)
• Artis REIT (TSX: AX-U, OTC: ARESF)–6–3–1 (CAD17.19)
• Bank of Nova Scotia (TSX: BNS, NYSE: BNS)–11–9–1 (CAD72.87)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–5–1–1 (CAD15.46)
• Brookfield Real Estate Services Inc (TSX: BRE, OTC: BREUF)–0–1–0 (CAD15.00)
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, NYSE: BEP)–4–4–2 (CAD34.06)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–8–3–0 (CAD24.44)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–8–4–2 (CAD43.40)
• DH Corp (TSX: DH, OTC: DHIFF)–3–5–1 (CAD33.43)
• Dream Office REIT (formerly Dundee REIT) (TSX: D-U, OTC: DRETF)–4–4–0 (CAD32.64)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–4–3–0 (CAD13.02)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–1–6–1 (CAD11.09)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–5–7–0 (CAD79.30)
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–3–6–0 (CAD30.75)
• Pembina Pipeline Corp (TSX: PPL, NYSE: PBA)–7–5–0 (CAD48.05)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–4–5–0 (CAD29.69)
• Shaw Communications Inc (TSX: SJR/B, NYSE: SJR)–4–12–3 (CAD26.63)
• Student Transportation Inc (TSX: STB, NSDQ: STB)–2–3–1 (CAD7.55)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–8–5–0 (CAD27.29)

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN, OTC: ACAZF)–1–1–1 (CAD13.83)
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–7–4–0 (CAD51.28)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–10–10–1 (CAD34.68)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–2–3–1 (CAD21.75)
• Crescent Point Energy Corp (TSX: CPG, NYSE: CPG)–22–2–1 (CAD51.18)
• Enerplus Corp (TSX: ERF, NYSE: ERF)–15–4–0 (CAD29.20)
• Extendicare Inc (TSX: EXE, OTC: EXETF)–0–3–2 (CAD7.44)
• Lightstream Resources Ltd (TSX: LTS, OTC: LSTMF)–2–14–2 (CAD7.84)
• Magna International Inc (TSX: MG, NYSE: MGA)–12–9–1 (CAD118.47)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–6–4–1 (CAD22.65)
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–1–0–0 (CAD7.00)
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–6–3–0 (CAD21.91)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–13–7–1 (CAD45.24)
• PHX Energy Services Corp (TSX: PHX, OTC: PHXHF)–7–3–0 (CAD18.47)
• ShawCor Ltd (TSX: SCL, OTC: SAWLF)–4–2–0 (CAD64.00)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–14–7–1 (CAD79.34)
• Wajax Corp (TSX: WJX, OTC: WJXFF)–3–6–0 (CAD36.13)