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November 9, 2020

Strong Reports For Manufacturing In U.S., Canada

 

  • The Institute for Supply Management’s manufacturing purchasing managers index (PMI) rose to 59.3 percent in October, up 3.9 percentage points from the September reading of 55.4 percent and the highest since September 2018. The new orders index rose, as did readings for production, backlogs of orders, employment, inventories, and prices. The report noted that, among the six biggest manufacturing industries, five (Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; Computer & Electronic Products; and Transportation Equipment) all registered strong growth. There also was expansion in the reading for primary metals. Click here to read the full report.
  • The IHS Markit Canada Manufacturing PMI registered 55.5 in October, down slightly from 56 in September, but good enough to be indicative of another strong improvement in overall business conditions. The rise in the headline reading was supported by the fastest rise in production volumes since August 2018, which partially offset softer rates of new business growth and job creation compared to the previous month, IHS Markit said. Click here to read the full report.
  • The U.S. Labor Department announced last week that nonfarm business sector labor productivity increased 4.9 percent in the third quarter of 2020 as output increased 43.5 percent and hours worked increased 36.8 percent. For the manufacturing sector, the report indicated labor productivity rose at a 19 percent annualized rate in the third quarter, the largest quarterly increase since the government started collecting data in 1987. Manufacturing output rose 54.8 percent in the third quarter while the number of hours worked jumped 30.1 percent.
  • Factory orders in the United States rose 1.1 percent in September, better than the 0.6 percent rise in August and slightly higher than the 1.1 percent analysts had anticipated. Unfilled orders fell 0.2 percent, inventories were unchanged, and shipments were up 0.3 percent. The U.S. government also reported that orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, rose one percent in September.
  • The U.S. trade deficit decreased from $67 billion in August 2020 to $63.9 billion in September 2020 as exports rose more than imports. The goods deficit dropped $3.1 billion to $80.7 billion while the services surplus increased less than $0.1 billion and now stands at $16.8 billion. The overall deficit for the first nine months of 2020 was $485.6 billion, an 8.6 percent increase from the same period in 2019. The goods deficit alone, however, was about one percent smaller, coming in at $656.4 billion for the first three quarters of 2020. The United States’ trade deficit with China was $222.8 billion for the first nine months of this year, down 15.2 percent from $262.8 billion for the same period in 2019.
  • Canada’s trade deficit increased to C$3.25 billion in September from C$3.21 billion in August. The gap was wider than analysts had anticipated. Imports expanded by 1.5 percent due to higher crude oil imports, while exports, led by lumber and aircraft, increased at the same rate. Exports to the United States dropped 1.2 percent. Benjamin Reitzes, Canadian Rates and Macro Strategist at BMO Capital Markets, told Reuters, “Canada’s trade gap has widened notably through the pandemic … With energy prices remaining low, it’s going to be difficult to meaningfully narrow the gap in the short term.”
  • The U.S. economy gained 638,000 jobs in October, with private sector payrolls increasing by 906,000 jobs and government payrolls declining by 268,000. Goods-producing industries saw an increase of 123,000 jobs while the construction sector picked up 84,000 new jobs. Since May, the economy has recovered 54 percent of the 22.1 million jobs that were lost in March and April. The U.S. unemployment rate now stands at 6.9 percent, down from its pandemic peak of 14.7 percent.
  • The Canadian economy added 83,600 jobs in October while the nation’s unemployment rate fell to 8.9 percent from nine percent in September. The reading was slightly worse than the 100,000 analysts had predicted the country would gain. The accommodations and food services sector lost 48,200 jobs, the largest reduction for any single sector, while the wholesale and retail trade industries added 45,300 jobs.
  • In other economic news: construction spending in the United States rose 0.3 percent from August 2020 to September 2020 and 1.5 percent from September 2019 to September 2020 and, during the week that ended October 31, 751,000 individuals filed for federal unemployment benefits in the United States, a decrease of 7,000 from the previous week’s level.