Today’s U.S. and Canadian Data

November 10, 2010

Four indicators of interest were released at 13:30 GMT today: U.S. and Canadian trade figures for September, U.S. jobless insurance claims and U.S. import and export prices.

The downward trend in new U.S. jobless insurance claims, a proxy for the layoff rate, has resumed after a roughly 11-month pause dating back to the autumn of 2009.  Their four-week average of 446.5K for October 10 – November 6 constitutes a 26-month low and is down from 459K in the four weeks to October 9 and 478.25K in the four weeks to September 11.  Total continuing claims of 4.3 million in the week to October 30 were down from 4.5 million seven weeks before.  The direction of these data is positive, but the task ahead remains endless.  Infinity minus one is still infinity.  It will take a decade, if not longer, for the jobless rate to return to 5.0%.

The Canadian trade deficit of CAD 2.485 billion in September was 66% wider than August’s shortfall and almost as big as July’s record CAD 2.511 gap.  Non-energy exports fell 2.3% in the last month, while non-energy imports went up 1.4%.  Among industrial goods and materials, exports slid 2.3%, while imports advanced 5.6%.  Non-auto consumer good exports plunged 15.9% compared to a 1.9% drop in such imports.  The third-quarter trade deficit of CAD 6.489 billion was CAD 4.25 billion greater than the deficit from the second quarter.  Canada’s current account, due in a few weeks, will probably exceed 3.5% of GDP.  That’s quite a turnaround for a country whose current account surplus equaled 1.0% of GDP in 2007 and 0.4% of GDP in 2008.  Competitiveness has been eroded by Canadian dollar appreciation.  The U.S. depression in housing and autos hurt further.

The U.S. goods and services trade deficit narrowed 5.3% in September to $44.0 billion.  The merchandise trade deficit on a census basis of $476 billion in January-September was $114.9 billion ($12.8 billion per month) wider than a year earlier.  China accounted for 42.3% of that deficit but just 30.8% of its on-year incremental growth.  OPEC was responsible for 15.7% of the census basis trade gap in the first nine months of 2010, and those oil producer accounted for 27.5% of the total deficit’s incremental advance.  Europe and countries in the western hemisphere had U.S. deficit shares of 15.3% and 14.3%, similar to each other and likewise about the same as OPEC’s share.  8.9% of the U.S. deficit so far this year was with Japan.

The U.S. terms of trade in October was better than a year earlier, as import prices rose 3.6% and export prices climbed 5.8%.  These posted October-over-September gains of 0.9% and 0.8%.  Core nonfuel import price inflation slowed to 2.5% from a 12-month pace of 2.6% in September and 2.7% in August.

A pattern of more encouraging U.S. data has emerged lately.  Last Friday’s labor force survey showing a 151K rise of jobs and a 110K upward revision to jobs in August and September was another example.  Data naturally wax and wane, and it remains to be seen how meaningful the apparent improvement really is.  The juxtaposition of better figures with the Fed’s controversial return to quantitative easing is nonetheless awkward from a public relations standpoint. 

Copyright Larry Greenberg 2010.  All rights reserved.  No secondary distribution without express permission.

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