Canadian Growth Stalls, As Does U.S. Job Growth

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

• Statistics Canada said the country’s gross domestic product was nearly unchanged in the second quarter, following a 0.6 percent increase in the first quarter. The slowdown was largely due to a decline in housing investment, smaller inventory accumulation, slower international exports, and reduced household spending. Improved business investment in engineering structures and higher government spending contributed to growth, however.
• The U.S. Department of Commerce announced economic growth in the second quarter of 2023 was slightly better than previously estimated. The reading came in at a 2.1 percent annualized rate compared to the two percent growth reading previously announced.
• The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) fell to 48.0 in August from 49.6 in July. It was the index’s lowest reading since June 2020. Both output and new orders fell and employers also cut back on hiring. Click here to read the full report.
• The Institute for Supply Management’s PMI for the United States showed the country’s manufacturing sector contracted in August for the tenth consecutive month. The index registered 47.6 percent, 1.2 percentage points higher than the 46.4 percent recorded in July, but below the 50 point mark that indicates growth. New orders remained in contraction territory at 46.8 percent, but other readings improved slightly. Read the full report here.
• Regional U.S. manufacturing readings released last week were decidedly mixed. Positive news came from the Federal Reserve Bank of Kansas City, which said the manufacturing sector in its region strengthened last month. The bank’s composite index was 0 in August, up from -11 in July, due mostly to improvements in the printing, wood production, and furniture manufacturing subsectors. The production and volume of shipments indexes also increased significantly. Read the full report here. Unfortunately, the Federal Reserve Bank of Dallas announced Texas factory activity contracted again in August due to decline in production and new orders. The capacity utilization index also fell to -3.7, the shipments index dropped 14 points to -15.8, and the capital expenditures index declined to -8.6, a three-year low. Read more here.
• The U.S. personal consumption expenditures (PCE) price index, which is the Federal Reserve’s preferred measure of inflation, rose 0.2 percent in from June 2023 to July 2023 and 3.3 percent from July 2022 to July 2023. The year-over-year increase is higher than it was in June. The “core” PCE, which excludes volatile food and energy prices was up 4.2 percent year-over-year.
• The U.S. employment market remains strong, but may not be as hot as it once was. Employers across the country added just 187,000 jobs in August while the country’s unemployment rate rose to 3.8 percent. The number of jobs open in the United States fell to 8.8 million in July and during the week that ended Aug. 26, 2023, 228,000 individuals filed for U.S. federal unemployment benefits for the first time, a decrease of 4,000 from the previous week. The four-week moving average of first-time claims rose, however. During the week that ended Aug. 19, 2023, 1.725 million individuals continued to receive jobless benefits, an increase of 28,000 from the week before. The four-week moving average of continuing claims also rose.
• In other economic news: Construction spending in the United States rose 0.7 percent between June 2023 and July 2023 and 5.5 percent between July 2022 and July 2023; Canadian job vacancies remained on a downward trend, falling 8,900 to 753,400 in June; and the Conference Board’s index of consumer confidence for the United States fell to 106.1 in August from 114.0 in July due to declining optimism about the current state of the economy.