Canada – In September, factory sales were up 1.4%, reversing in part the 1.8% decline a month earlier (revised upward from -2.1%). The upsurge was entirely attributable to motor vehicles and parts (+15.6%). Gains were partially offset by a 28.6% pullback in aerospace products. New orders sprang 8.3% while inventories decreased for an eighth straight month, shrinking 1.9%. The inventory-tosales ratio thus sank to an 11-month low. In constant dollars, manufacturing sales climbed 1.8% on the month after sliding 2.2% in August. Constant-dollar sales advanced an annualized 15% in Q3, for a first significant positive contribution to economic growth in 10 quarters.
In October, headline CPI inflation rose 0.1% year over year, marking the first 12-month increase since May 2009. The index edged down 0.1% on the month after staying flat in September. Core CPI inched up 0.1% on the month and registered 1.8% year over year, up from 1.5% in September. The strongest forward impetus (m/m, seasonally adjusted) came from clothing and footwear (+0.4%) and the heaviest drag, from health and personal care (-0.6%). Headline inflation should heat up in the quarters ahead given the energy price dynamics.
Wholesale sales jumped 0.2% in September after slipping 1.5% the previous month. Statistics Canada’s leading indicator moved up 0.7% in October for a fourth consecutive rise.
United States – In October, retail sales rebounded 1.4% from a 2.3% drop in September. However, sales excluding autos were soft, advancing only 0.2%. Looking forward, sales growth will depend on how employment fairs.
Industrial production eked up 0.1% after progressing 0.7% the previous month. Capacity utilization crept up to 70.7% from 70.5%.
Headline CPI inflation fell 0.2% from 12 months earlier. The rate drew significantly closer to positive territory than in September (-1.3%). The index gained 0.3% on the month. The core CPI increased 0.2% month over month and 1.7% year over year, up from 1.5% in September. We expect the headline reading to approach 2% by yearend.
Housing starts dove sharply in October (-10.6%) as homebuilders scaled back activity in anticipation of the end of the government tax credit for first-time homebuyers. However, with the program now extended, starts should bounce back in the months ahead.
The Conference Board’s leading indicator notched up 0.3% in October after rising 1.0% in September. This marks the seventh monthly advance in a row for the index. The Philly Fed Survey for November showed good promise, vaulting to 16.7 from 11.5, its highest level since June 2007.
