MARKET STATISTICS: Weekly Change
ECONOMIC STATISTICS:
WEEKLY ECONOMIC REPORT
DECEMBER 1, 2014
Ronald Chow, Chief Economist ! ronaldchow@crescentschool.org
CANADIAN REAL GDP PERFORMS ABOVE CONSENSUS Canadian Real GDP – Q3 Canadian real GDP in Q3 continued to move forward at a 2.8% annual rate, well above the consensus call (2.1%). This followed up the 3.6% rise in Q2; the big driver for growth was net exports, which added 0.9 ppts to the overall growth (marking the seventh quarter of the past eight where net exports have contributed). Housing and consumer spending also had modest positives, and even business investment was positive (barely). The GDP deflator was about as expected in Q3, rising at 1.8% annualized and up 2.0% y/y. The personal savings rate held steady at 3.9% in Q3 but is down from 4.7% a year ago and a bit low for comfort. Canada has recently seen an awesome string of much better-than-expected economic data, and this report adds a nice exclamation mark. In the past three weeks alone, we have seen strong jobs, a 6.5% unemployment rate, record auto sales, 7% gains in home sales and prices, above-target CPI and now near-3% GDP growth.
CANADIAN CURRENT ACCOUNTS CONTINUES TO IMPROVE RAPIDLY Canadian Current Account – Q3 Canadian’s current account deficit narrowed sharply to $8.4 billion in Q3 from a revised shortfall of $9.9 billion in the prior quarter and $13.1 billion in the same period a year ago. That’s the smallest deficit since the current account fell into the red in 2008Q4, and a very manageable 1.7% of GDP. The goods balance recorded its third consecutive surplus in Q3. Meanwhile, the services deficit narrowed modestly to $5.7 billion, remaining in the narrow range seen over the past years. Canada’s current account deficit has improved rapidly over the past three quarters, lifted by a weaker loonie and improving U.S. demand. This trend should continue for the next couple of years; however, the recent decline in oil prices will be a significant obstacle for the goods balance.
AUTO SECTOR “DRIVES” CANADIAN RETAIL SALES Canadian Retail Sales – September Canadian retail sales rose 0.8% in September, beating the consensus call for a 0.5% gain. The auto sector accounted for all of the increase, with new car sales jumping 3.3% and used cars surging 4.4%. All other sectors were flat in the month. The solid headline increase suggests that consumers remain relatively upbeat, even if it was driven entirely by autos. However, the recent softness in underlying sales is something to watch. WEEKLY ECONOMIC REPORT
DECEMBER 1, 2014
Ronald Chow, Chief Economist ! ronaldchow@crescentschool.org
U.S. CONSUMERS STEP BACK U.S. Personal Income and Consumption – October U.S. consumer spending rose 0.2% in October, a bit disappointing. Interestingly, consumer spending was widespread, on all major categories except for cars. Incomes were on the softer side of expectations, also up 0.2% in October, which was half the expected pace. The core PCE deflator did pick up to 0.2% in the month, lifting the y/y trend to +1.6% from five consecutive months of +1.5% readings. On the surface, the spending data were a little on the softer side of expectations – not a super-encouraging start to Q4. Fortunately, all of the softer spending was in one category.
U.S. NEW HOME SALES UPSHIFTS AGAIN U.S. New Home Sales – October U.S. new home sales unexpectedly rose in October, with the 0.7% gain the third increase in a row, to 458,000 annualized, the highest in just over a year. The sales gain was split – higher in the NE and MW, lower in the South and West. Housing should continue to receive support by improving economic activity and still-low rates, as well as supposed easier credit conditions. The overall trend is still intact; we’re just getting a few hiccups.
U.S. DURABLE GOODS UNEXPECTEDLY RISE U.S. Durable Goods Orders – October U.S. durable goods unexpectedly rose in October, up 0.4% in the month. Nondefense aircraft and parts slipped for the third month in a row. Excluding transportation, orders unexpectedly fell, with the 0.9% drop the first since the summer. The were fewer orders for general machinery, computers and electrical/appliances. This report displays the downside risk for Q4 capital expenditures (expenditures altering the future of the business).
THE WEEK AHEAD U.S. Total Vehicle Sales – November - Monday, December 1, 2014
U.S. Productivity – Q3 - Wednesday, December 3, 2014 at 8:30am
Canadian Employment Report – November - Friday, December 5, 2014 at 8:30am
U.S. Employment Report – November - Friday, December 5, 2014 at 8:30am
UPCOMING CSIT MEETINGS Monday, December 1, 2014 at 1:30pm - Sector Meetings WEEKLY ECONOMIC REPORT
Thursday, December 4, 2014 at 3:30pm - Team-Wide Meeting DECEMBER 1, 2014
Ronald Chow, Chief Economist ! ronaldchow@crescentschool.org