Canadian Economy Slows Down

Connecting the Dots monitors all major economic announcements in the United States and Canada, but MSCI also offers industrial metals industry-specific data products that provide much deeper analysis and insight. Visit MSCI’s website and click on industry data to learn more about our Metals Activity Report (MAR), Momentum Monitors, and Economic Pulse.

Meanwhile, here are the major economic headlines from the last two weeks:

• Canada’s economy was essentially unchanged for the third consecutive month in October. Specifically, Statistics Canada said the nation’s gross domestic product expanded just 0.1 percent that month due to contractions in the wholesale trade and manufacturing sectors.
• Regional manufacturing readings in the United States were decidedly mixed last month. The Federal Reserve Bank of Kansas City’s manufacturing index came in at -1 in December, up slightly from -2 in November. Activity for nondurable goods improved while activity declined slightly for durable goods, mostly due to primary metal and furniture manufacturing. The production, shipments, and new orders indexes were all slightly negative, but employment activity rebounded. Read the full report here.  The Federal Reserve Bank of Philadelphia’s manufacturing index declined from -5.9 in November to -10.5 in December, marking the index’s 17th negative reading in the past 19 months. The new orders index dropped sharply from +1.3 to -25.6 while the shipments index rose, but was still in contractionary territory at -10.8. Read that report here. The Federal Reserve Board of Richmond said manufacturing activity in its region also declined due to the fact that all of its three component indexes, shipments, new orders, and employment, edged down. One bright spot: the Federal Reserve Bank of Dallas said Texas factory activity stabilized after contracting in November. The bank’s production index, a key measure of manufacturing conditions, rose nine points to +1.4. Read more here.
• The U.S. Department of Commerce’s personal consumption expenditures (PCE) price index fell 0.1 percent from October 2023 to November 2023, marking the first monthly price decline since April 2020. The annualized inflation rate dropped to 2.6 percent, down from 2.9 percent a month earlier. The PCE is the Federal Reserve’s preferred metric for gauging inflation. The report also showed personal incomes in the United States expanded 0.4 percent in November 2023.
• Payroll employment in Canada declined by 44,600 jobs in October. Manufacturers shed 3,400 jobs that month. Declines in manufacturing were principally recorded in transportation equipment manufacturing, chemical manufacturing, and fabricated metal product manufacturing. Job vacancies, which totaled 633,400, were virtually unchanged from September.
• During the week that ended December 23, applications for U.S. unemployment benefits increased to a level that remains consistent with a strong labor market. Specifically, first-time claims rose by 12,000 to 218,000, and the four-week moving average of first-time claims, which offers a clearer picture of trendlines, was little changed at 212,000. Meanwhile, the number of people who continued to receive benefits was at 1.875 million during the week that ended December 16, a number that was up slightly from the week before.
• In other economic news: The Federal Reserve Bank of Chicago’s National Activity Index, which is designed to gauge overall economic activity and related inflationary pressure, was at a robust +0.03 in November, up from -0.66 in October; U.S. housing starts rose 14.8 percent from October 2023 to November 2023 and 9.3 percent between November 2022 and November 2023; the number of new homes under construction in the United States fell 12.2 percent between October and November, but were up 1.4 percent year-over-year; Canadian retail sales increased 0.7 percent in October as sales rose in seven of nine subsectors, including motor vehicle and parts dealers; and the Conference Board’s index of U.S. consumer confidence soared in December, rising to 110.7, a number that was up from a revised 101 in November and represented the most significant increase in the reading since early 2021.