RBC Financial’s economists say that today’s economic data suggest that the U.S. economic recovery is still on track, although moving slowly. Meanwhile, Canada’s recovery powers ahead.

“Several important U.S. economic indicators came out today suggesting once again that the U.S. economic recovery is proceeding but at a rather tentative pace,” notes RBC. Initial jobless claims data showed a four-week moving average at 400,000 up from 395,000 in the previous week. RBC says that this marks the first time it has reached that psychologically-important level since June. “Such levels of initial jobless claims are consistent with a weakening labour market.”

On a more positive note, RBC points out that U.S. productivity growth in the second quarter was revised up to 1.5% from an initial estimate of 1.1%; hours worked remained the same, but output growth was revised up bringing down the initial estimate of unit labour costs. In the manufacturing sector, productivity grew 4.3%. “Strong productivity growth has been one of the few clearly positive factors during this recovery as it usually translates into better profits and higher wages,” it says.

Also, the August ISM non-manufacturing report declined a little more than expected, indicating the expansion in the services sector is also slowing. Finally, it was reported yesterday morning that U.S. construction spending held steady in July after two months of declines. “While these overall numbers are slightly better than expected, the decline for a second consecutive month of residential construction spending is troublesome given the extent to which this sector supported the economy in the first half of the year,” says RBC.

By contrast, RBC says, the Canadian economy (and construction in particular) “just keeps on rolling”. Building permits reached a new record high of nearly $4 billion in July, a 3% gain over June.