Weekly Economic Report
September 22, 2014
U.S. CPI Unexpectedly Fell 0.2% in August U.S. Consumer Price Index - August For the first time since August 2013, U.S. consumer price index (CPI) fell by 0.2%. Energy fell by 2.6% in the month, as gasoline prices tumbled. Food prices rose by a moderate 0.2%. Excluding food and energy, consumer prices did however remain unchanged in the month. On a year-over-year basis, headline CPI slowed to 1.7% from 2.0% in July, signally the slowest increase since March. In a separate news release, the U.S. current account deficit unexpectedly shrank below $100 billion for just the second time in five years. The $98.5 billion shortfall was primarily due to the fact that the balance on secondary income narrowed to $21.4 billion, the smallest in eight years. Overall, this improvement is likely to be temporary, but it still is good news.
Canadian Housing Look Well-Behaved and Calm
A Hiccup in U.S. Industrial Production
Canadian Existing Home Sales - August
U.S. Industrial Production and Capacity Utilization August
Canadian existing home sales rose 1.8% in August, lifting a modest 2.1% above levels a year-ago. The level of sales is the best in over 4 years, and is nearing pre-recession highs reached in 2007. However, on the sales side, almost half the major markets (12) reported declines last month, with double-digit losses in Halifax, Sudbury and Winnipeg. Price growth did manage to hold steady at 5.3% year-overyear, with Calgary (9.8%) and Greater Toronto (7.8%) remaining as two hotspots. Canada’s housing market remains healthy and well balanced overall. The talk about the “hot housing market” is really only a 3-city story.
Production slipped 0.1% in August, with manufacturing slipping 0.4% while the auto sector took a 7.6% shutdown in the month. Excluding autos, industrial output actually climbed 0.3% due to the other two main areas of industrial production, utilities and mining, experiencing 1.0% and 0.5% gains respectively. This hiccup is mainly due to the auto sector, but look for improvement in production to resume in the coming months.
Important Economic Statistics
The Week Ahead U.S. Existing Home Sales - August - Monday, September 22, 2014 at 10:00 am
Canadian Retail Sales - July - Tuesday, September 23, 2014 at 8:30 am
Canadian Survey of Employment, Payroll and Hours – July - Thursday, September 25, 2014 at 8:30 am
U.S. Real GDP – Q2 Final - Friday, September 26, 2014 at 8:30 am
Ronald Chow, Chief Economist • ronaldchow@crescentschool.org