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July 5, 2016

Moderate Growth In The United States, Canada

  • The U.S. Department of Commerce announced last week that the nation’s economy expanded at a 1.1 percent annualized rate in the first quarter of 2016. While lower than the fourth quarter 2015  growth rate of 1.4 percent, the reading was higher than the 0.8 percent growth rate the department had previously estimated for the first quarter. The improved reading for the first quarter was due to a higher level of exports than had been previously estimated. The decline from the fourth quarter was due to lower personal consumption and a drop in nonresidential fixed investment.
  • In a reading that was in line with expectations, Statistics Canada announced last week that the Canadian economy expanded 0.1 percent from March to April. Led by increases in petroleum, coal, and chemical production, the manufacturing sector grew 0.4 percent.
  • Led by an improvement in production, new orders, and employment, the Markit purchasing managers’ index (PMI) for the United States rose to 51.1 in June from 50.7 in May. Markit noted, “Producers are struggling in the face of the strong dollar, the energy sector decline and presidential election jitters.” The Institute for Supply Management PMI, meanwhile, rose to 53.2 in June from 51.3 percent in May on news that new orders, production, and employment readings improved.
  • According to the U.S. Department of Labor (DOL), the number of individuals who filed for federal unemployment benefits rose to 268,000 for the week that ended June 25 from 258,000 the week before. The four-week moving average of first-time claims remained the same while the number of individuals who continued to receive benefits fell to 2.12 million for the week that ended June 18 from 2.14 million the week before. The four-week moving average of continuing claims also fell.
  • Regional manufacturing readings released last week continued to show a softening in the sector. Driven by a decline in shipments, new orders, and order backlogs, the Richmond Federal Reserve’s manufacturing index fell to -7 in June from -1 in May. The Dallas Federal Reserve said its index improved slightly to -18.3 in June from -20.8 in May, but production contracted in Texas for the second month in a row and the capacity utilization and shipments indexes remained negative for a second month as well.
  • In other economic news: U.S. construction spending fell 0.8 percent from April 2016 to May 2016, but was up 2.8 percent from May 2015; the Conference Board Consumer Confidence Index rose to 98.0 in June from 92.4 in May because consumers said they are feeling better about both the current and future prospects for the U.S. economy; and U.S. personal incomes increased 0.2 percent between April 2016 and May 2016.