Economic overview of Canada & Mexico - October 13, 2006

Canada: GDP: grew 2.9% from Q2 '05 to Q2 '06, and 0.2% in July, compared to June Consumer Prices: + 2.1% year-on-year in the month of August Producer Prices: + 3.6% year-on-year in the month of August Unemployment: 6.4% in September. Since the beginning of the year, employment has increased by 210,000 jobs (+ 1.3%). Industrial Production: + 0.7% year-on-year in July Housing: unlike in the US, prices in September were up 10% from last year. Trade Balance: + $8.8 billion at the end of July, year-to-date Current Account Balance: $28.5 billion in Q2 of '06 Automotive Industry: as of August, 1,754,655 vehicles were produced this year, almost unchanged from the same period last year. Currency: CA$1.13 to US$1 as of October 4 (CA$1.18 to US$1 a year ago) Steel: total crude steel production for August was 1.349 million mt. For the first eight months of the year, the total amount of crude steel produced was 10.7 million mt, which is 3.7% ahead of last year's YTD tonnage for the same period. From January to July of this year, a total of 8.9 million mt of rolled carbon steel products were shipped by Canadian mills, 23% of which was exported to the US. Mexico: GDP: rose by 4.7% from Q2 '05 to Q2 '06 Industrial Output: + 5.8% at the end of July, year-on-year Consumer Prices: rose 1.01% from August to September, the biggest monthly increase since December 2000. The inflation rate quickened to a 4.1% annual rate in September. Trade Balance: - $783 million in August. Current Account Balance: fell $0.6 billion from Q2 '05 to Q2 '06 Currency: Peso 11.1 to US$1 as of October 4 (Peso 10.7 to US$1 a year ago) Automotive Industry: A total of 203,425 vehicles were produced in September, 11.7% ahead of August. Steel: 1.27 million mt of raw steel produced in August (estimated) - about the same amount produced in July. As regards year-to-date in August, 10.5 million mt were produced - about 4.8% below last year's pace. Special Concern: there are rumblings in Lazaro Cardenas that the strike at the Sicartsa mill, which lasted four months and was settled in August, might resume. According to reports, the union is upset that the Mexican authorities have asked the Canadian authorities for the extradition of their leader, Napoleon Gomez Urrutia. Mr. Gomez has been accused of embezzling union funds. Recent reports have announced that the owner of Sicartsa, Villacero is negotiating with a number of international steel conglomerates with a view to the sale of all or part of Sicartsa.