U.S. Economic Growth Strong While Canada’s Remains Flat
- The United States economy expanded at a 3.2 percent annualized rate in the third quarter of 2017 after it expanded 3.1 percent in the second quarter. According to the U.S. Commerce Department, the increase in real economic growth in the third quarter reflected positive contributions from personal consumption, private inventory investment, nonresidential fixed investment, exports, federal government spending, and state and local government spending that were partly offset by a negative contribution from residential fixed investment. Imports, which are a subtraction in the calculation of economic growth, decreased. In related news, the Federal Reserve Bank of Chicago announced its national activity index, a key predictor of fourth quarter growth, fell to +0.15 in November from +0.76 in October.
- In a reading that was lower than analysts’ predictions, Statistics Canada announced that economic growth in Canada was flat from September 2017 to October 2017. A decline in oil and gas extraction was the primary reason for the disappointing reading.
- The manufacturing industry remained strong in December in most regions of the United States. The Federal Reserve Bank of New York announced that its manufacturing index remained relatively flat in November despite gains in shipments and new orders. The sector strengthened in the Philadelphia region in December. The local Federal Reserve index increased to +26.2 from +22.7 due to improvements in shipments and new orders. The Federal Reserve Bank of Richmond announced its manufacturing index fell to +20 in December from +30 the month before due to declines in shipments and new orders. According to the Federal Reserve Bank of Dallas, manufacturing strengthened in Texas after production and new orders in December rose to its highest level in 11 years. The Federal Reserve Bank of Kansas City announced its manufacturing reading fell in November due to slower rates of shipments and new orders.
- In other economic news: the number of new homes under construction in the United States increased 3.3 percent between October 2017 and November 2017 and 12.6 percent between November 2016 and November 2017; the number of new homes sold in the United States increased 17.5 percent between October and November and was up 26.6 percent year-over-year; the University of Michigan’s index of consumer sentiment fell to 95.9 in December from 98.5 in November; and the Conference Board’s consumer confidence reading fell to 122.1 in December from 128.6 in November.