U.S. Economy Contracts, But Canada Ekes Out Positive Growth

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 Opportunity and Risk Tracker.

Meanwhile, here are the major economic headlines from the last week:

• According to the U.S. Commerce Department, the country’s gross domestic product (GDP) fell at an annual rate of 0.6 percent in the second quarter of 2022 after dropping 1.6 percent in the first quarter. A previous estimate for GDP also showed a decline of 0.6 percent, but the update showed an upward revision to consumer spending that was offset by a downward revision to exports. In related news, the Federal Reserve Bank of Chicago’s National Activity Index a key gauge of growth, decreased to a neutral value in August from +0.29 in July. The decline was due largely to production-related indicators, the bank said. A zero value is associated with the national economy expanding at its average rate of growth; negative values with below-average growth; and positive values with above-average growth.
• Statistics Canada reported the country’s economy grew 0.1 percent as expansion in goods-producing industries offset a decline in services-producing sectors. According to agency data, third quarter annualized economic growth should come in around one percent, a number that is below the Bank of Canada’s most recent forecast of two percent.
• The U.S. Department of Commerce reported personal consumption expenditures (PCE), the Federal Reserve’s preferred metric for gauging inflation, rose 0.3 percent from July to August. Excluding food and energy, the PCE price index increased 0.6 percent. Personal income increased $71.6 billion (0.3 percent) in August while disposable personal income increased $67.6 billion, or 0.4 percent. In related news, small businesses’ concern over inflation reached a new high according to the latest MetLife and U.S. Chamber of Commerce Small Business Index that was released last week. Incredibly, when asked to choose between reducing inflation or avoiding an economic downturn, 59 percent said they believe the priority right now should be reducing inflation. Read the full survey here.
• The manufacturing index from the Federal Reserve Bank of Richmond rose from -8 in August to 0 in September due to the fact that two of its three component indexes improved notably. The shipments and volume of new orders indexes rose from -8 and −20 in August to +14 and -11 in September, respectively. A third component, employment, fell to 0 from 11 in September, however, as hiring challenges persisted. According to the Federal Reserve Bank of Dallas, growth in Texas factory activity picked up in September. The bank’s production index rose eight points to +9.3, a reading suggestive of stronger output growth. The new orders index ticked down to -6.4, however, its fourth month in a row in negative territory, while the growth rate of orders index also remained negative but did move up 13 points to -1.7.
• In other economic news: the number of new homes sold in the United States rose 18.3 percent between July 2022 and August 2022, but was down 0.1 percent from August 2021 to August 2022; the number of U.S. residents who received federal unemployment benefits for the first time and the number who continued to receive benefits fell; and the Conference Board’s index of consumer confidence rose while the University of Michigan’s reading of consumer sentiment ticked up slightly.