Weekly Economic Report
October 6, 2014
U.S. Payrolls Rebound! U.S. Employment Report – September U.S. nonfarm payrolls blasted above expectations, recording a rebound of 248,000 in September – higher than the upwardly revised 180,000 in August and taking the six-month average to 245,000 from 194,000 in March. The gains were widespread across industries, with business-services strengthening, retail rebounding and construction holding high. As well, the unemployment rate was down two-tenths to 5.9%, the first breach of the 6% mark since July 2008. This strong rebound in hiring suggests the U.S. economy retains good momentum, and consensus of a +3% GDP growth in Q3.
Canadian Trade Balance Leap… In The Wrong Direction Canadian Merchandise Trade Balance - August Canada’s merchandise trade balance swung violently to a $610 million deficit in August, a large movement from the $2.2 billion surplus in the prior month – much worse than expected. Export volumes fell 2.5%, as the auto sector fell a whopping 11.2%. The declines extended further, with most sectors down in August, and exports excluding autos slipping 0.9%. Meanwhile imports rose a very strong 3.9% with energy and metals posting hefty increases. However, despite this large hiccup in August, all 11 major export sectors saw volumes above year-ago levels in August, a feat only observed a handful of times over the past 15 years.
U.S. Manufacturing Follows The Global Trend
U.S. Nonmanufacturing Slips Too
U.S. Institute for Supply Management Manufacturing Index September
U.S. Institute for Supply Management Nonmanufacturing Index September
The U.S. manufacturing ISM dropped to 56.6 from 59.0 in the prior month, joining the other parts of the world: Europe expanded at its slowest pace in 14 months, and U.K. expanded at its slowest pace in 16 months. This is the first decline in the index since June and to the lowest level since June.
The nonmanufacturing ISM fell as well, like the manufacturing ISM, but was roughly in line with expectations at 58.6 in September. Of the four components which comprise the report: new orders declined 2.8 pts to 61; business activity fell 2.1 pts to 62.9, employment increased 1.4 pts to 58.5 and supplier delivery delays fell 0.5 pts to 52.0.
This was an unexpected setup back in the U.S. factory activity but the outlook for Q3 still looks good.
Regardless, comments that accompanied the report still paint a picture of steady growth
Important Economic Statistics
The Week Ahead U.S. Consumer Credit - August - Tuesday, October 7, 2014 at 3:00pm
Canadian Housing Starts – September - Wednesday, October 8, 2014 at 8:15am
Canadian Employment Report – August U.S. Budget Deficit - September - Friday, October 10, 2014 at 8:30am - Friday, October 10, 2014 at 2:00pm Ronald Chow, Chief Economist • ronaldchow@crescentschool.org