Some Downbeat North American Data

January 31, 2012

Canadian real GDP edged 0.1% lower in November.  This compares adversely with analyst forecasts of a 0.2-0.3% increase and left output in November only 0.7% above that in August expressed at an annualized rate.  Over the previous three months from May to August, GDP had advanced 4.4% annualized, so a rapid deceleration of economic momentum occurred in late summer/early autumn.  Canadian monetary authorities did not anticipate such a slowdown.  Their quarterly Monetary Policy Report released earlier this month penciled in growth of 2.0% annualized in the fourth quarter.  The central bank’s target interest rate has been at 1.0% since September 2010.  Production from the energy sector tumbled 2.1% in November and by 5.5% annualized between August and November.  Wholesale turnover fell 0.6% in the latest reported month and recorded only 1.1% growth from November 2010.  Construction also contracted in November.

The U.S. Case-Shiller house price index recorded a bigger decline in November than anticipated, 0.7% seasonally adjusted, and this depressed the 12-month rate of decline to 3.7% from a decline of 3.4% in the year to October.  House prices are at a new low for the move and 33.5% below their April 2006 peak.  Residential construction has dropped in six straight calendar years, recording a cumulative decrease of 58% (13.4% per annum) between 2005 and 2011.

The Conference Board index of U.S. consumer confidence weakened unexpectedly and by 3.7 points to 61.1 in January.  The average score last year was 58.0.  Real consumer expenditures went up just 0.8% per annum during the five years between 2006 and 2011.  In comparison, real private consumption had advanced 4.3% per annum in the five years when jobs and household wealth were expanding robustly between 1995 and 2000.

The Chicago regional purchasing managers index fell 2.0 points to 60.2 in January.  This was a three-month low and signaled a slower rate of manufacturing growth at the turn of the year.

Asian and European share prices earlier today had climbed on investor optimism regarding the euro debt negotiations.  This positive hand-off wasn’t sustained in North America because of today’s downbeat surprises.  A daily decline in the Dow today would be the fourth in a row to end an otherwise terrific month.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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