United States, Canada Both Posted Strong Growth Numbers In Fourth Quarter Of 2023

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

• The U.S. economy grew at a 3.2 percent annualized rate in the fourth quarter of 2023, a number that was down slightly from its third quarter level. Consumer spending, exports, state and local government spending, nonresidential fixed investment, federal government spending, and residential fixed investment were all up in the fourth quarter while private inventory investment fell.
• According to Statistics Canada, that country’s economy expanded at an annualized rate of one percent during the final three months of 2023. For all of 2023, however, the nation’s growth rate was the second-lowest rate seen since 2016. (Growth in 2020, the year the COVID-19 pandemic began, was slower than it was in 2023.) The fourth quarter expansion was driven by an increase in exports. Housing and business investment both fell, meanwhile.
• The S&P Global purchasing managers’ index (PMI) for the United States rose to 52.2 in February, up from 50.7 in January. The upturn reflected an improvement in operating conditions that was the strongest since July 2022. Production also increased at its fastest pace since May 2022.
• The S&P Global Canada manufacturing PMI rose to 49.7 in February from 48.3 in January, but, still, this measure has remained below the 50 threshold that separates expansion from contraction for 10 months in a row. Read the full report here.
• Regional manufacturing readings in the United States showed an improved landscape in February. The Federal Reserve Bank of Richmond’s manufacturing index for the central Atlantic region rose to -5 in February from -15 in January. New orders, opinions about local business conditions, and employment all improved while shipments held steady. Read the full report here. The Federal Reserve Bank of Dallas found manufacturing activity in Texas rebounded in February. Its general business activity index rose to -11.3 from -27.4 in January. Production and new orders were both up substantially while the gauge of future general business activity improved 6.2 points. Read the full report here. The Federal Reserve Bank of Kansas City’s manufacturing survey composite index for the central part of the United States also improved, rising to -4 in February from -9 in January. Shipments, new orders, and backlogs were all higher. Read the full report here.
• The core personal consumption expenditures price index, the U.S. government’s most trusted gauge of inflation, increased 0.4 percent from December 2023 to January 2024, a number that was in line with expectations. The reading rose 2.8 percent between January 2023 and January 2024, a slight improvement from the previous reading. At the same time, personal incomes were up one percent from December to January.
• The number of people who applied for U.S. unemployment benefits for the first time increased by 13,000 to 215,000 during the week that ended February 24. Averaged over the past four weeks, first-time claims declined to 212,500. In all, roughly 1.88 million people claimed jobless benefits in the United States during the week that ended February 17. That number was at its highest level since December 2021.
• In other economic news: U.S. construction spending fell 0.2 percent from December 2023 to January 2024, but rose 11.7 percent between January 2023 and January 2024; sales of new homes in the United States increased 1.5 percent between December 2023 and January 2024 and 1.8 percent year-over-year; the Conference Board’s Consumer Confidence Index® fell to 106.7 in February, down from a revised 110.9 in January; and the University of Michigan’s consumer sentiment index fell to 76.9 in February from 79.0 in January.