October 7, 2019

Canadian GDP Growth, U.S. Employment Growth Tepid


  • According to Statistics Canada, the country’s real gross domestic product was essentially flat in July due to weakness in oil and gas extraction sector. Economists had expected a growth rate of 0.1 percent.
  • The U.S. economy added 136,000 jobs in September and the nation’s unemployment rate fell from 3.7 percent in August to 3.5 percent last month. As CNBC explained, “A more encompassing measure that includes discouraged workers and the underemployed also fell, declining 0.3 percent points to 6.9 percent, matching its lowest in nearly 19 years and just off the all-time low of 6.8 percent.” The news was not all positive: manufacturers cut 2,000 workers in September and overall wages increased by only 2.9 percent for the year, the lowest increase since July 2018.
  • The U.S. trade deficit increased 1.6 percent to $54.9 billion from $54 billion in July, the federal government reported last week. Exports expanded only 0.2 percent while imports rose 0.5 percent. The deficit from January to August 2019 was seven percent higher than it was during the same period in 2018. As ABC News explained, while the overall gap increased in August “the politically sensitive gap with China in the trade of goods narrowed.” Specifically, the goods deficit with China dropped 3.1 percent in August to $31.8 billion and is down 11.4 percent so far this year.
  • The Wall Street Journal reports Canada recorded a smaller-than-expected trade deficit in August due to a “sharp rise [38.7 percent] in aircraft exports” and a 3.9 percent rise in energy exports. According to Statistics Canada, the gap fell to C$955 million Canadian dollars in August from C$1.382 billion in July. Exports from Canada increased 1.8 percent overall while imports rose just one percent. Exports to the United States rose 3.1 percent. Despite the improvement, TD Bank economist Omar Abdelrahman said the report did “little to alter our view that GDP growth slowed markedly in the third quarter, to around” one percent.
  • New orders for manufactured goods fell in the United States in August, declining 0.1 percent to $499.8 billion. Shipments also dropped 0.1 percent while unfilled orders rose 0.1. The unfilled orders-to-shipments ratio was 6.66, down from 6.67 in July. Inventories were virtually unchanged at $695.9 billion while inventories-to-shipments ratio was 1.38, also unchanged from July.
  • Manufacturing indicators for the United States were mixed last month. The Institute for Supply Management U. purchasing managers’ index (PMI) fell to 47.8 in September, its lowest since June 2009. The new export orders index reading fell to 41.0, the lowest level since March 2009 and down from the August reading of 43.3. The IHS Markit PMI reading for the United States improved, meanwhile, but did signal caution. IHS said, “[T]he overall picture remained one of a struggling goods producing sector that has suffered its worst quarter since 2009. Expansions in production and new orders remained only modest, meaning firms were encouraged to increase their workforce numbers only tentatively.” Additionally, “Business confidence remained relatively gloomy due to muted demand conditions.” One bright spot: the Federal Reserve Bank of Dallas reported that activity in the Texas manufacturing sector continued to expand in September, though at a slower rate.
  • The IHS Markit PMI reading for Canada rose to 51.0 in September from 49.1 in August. Exports improved, the value of new orders rose for the first time in seven months, and employment levels also were at a seven-month high. Click here to read the full report.
  • In other economic news: auto sales in the United States declined sharply in September; U.S. construction spending increased 0.1 percent from July 2019 to August 2019, but fell 1.8 percent between August 2018 and August 2019; and the number of individuals in the United States who continued to receive federal unemployment benefits fell during the week that ended September 21.