Canada – In August, the merchandise trade deficit narrowed to C$1.3 billion from a record $2.5 billion in July. Exports edged down $28 million or 0.1%. Though energy exports finally recorded an increase ($450 million) after six straight monthly declines, the advance was mostly reflective of higher prices. Wheat exports, too, registered a significant jump (+$207 million). However, these gains were offset in large part by lower exports of industrial goods and materials (-$575 million) and automotive products (-$136 million). Imports decreased $1.2 billion or 3.1%. The weakness was broadly based, energy being an exception (+$235 million). The major sectors to post lower imports included industrial goods and materials (-$635 million) and machinery and equipment (-$419 million). In real terms, exports inched up 0.1% while imports slipped 2.0%. Export prices sagged 0.2% as a 4.0% increase in the energy segment was offset by lower prices in all other major categories. Import prices dropped 1.1%.
So far in Q3, export volumes are down an annualized 7.5% from Q2 while import volumes have sunk 2.1%. In real terms, then, the trade deficit has deteriorated at this point in Q3. This suggests merchandise trade will detract from economic growth for a third quarter in a row.
According to the CMHC, housing starts fell to 220.2K in September from a revised 225.3K the month before. Urban multiple starts were down 3.9% to 136.1K, explaining most of the overall decline. Single-family units, for their part, slipped 1.4% to 67.6K. In rural areas, housing starts stood at 16.5K, up 8.4% on the month.
The new-housing price index rose 2.4% in the 12 months to August.
Of the 21 metropolitan regions surveyed, 17 posted yearover- year price increases. The largest gains were registered in Toronto and Oshawa (+4.7%), Winnipeg (+4.4%) and Regina (+3.5%). The steepest decline was recorded in the Victoria area (-3.0%).
United States – In August, the trade deficit widened to $44.2 billion from $42.5 billion in July. Exports and imports decreased $1.9 billion and $0.2 billion, respectively. Exports of industrial supplies and materials fell $1.2 billion while foods, feeds and beverage slumped $1.1 billion. Higher capital goods exports offset these large declines in part. Imports showed signs of softening domestic demand, with imports of consumer goods receding $1.2 billion and those of automotive vehicles and parts shrinking $0.8 billion. Based on the two months of data in so far for Q3, chances are that net exports will be a mild drag on economic growth in the quarter.
In September, import prices increased 1.1% for a second month in a row. Prices had pulled back in the four months prior to that. In both August and September, the increases were largely due to higher fuel prices, up 5.7% and 4.4%, respectively. Non-fuel import prices registered their first monthly advance (+0.2%) since April. Export prices were up 0.8% in September after springing 1.0% in August.
Still in September, the Producer Price Index for finished goods rose 1.1% month over month (s.a.), compared with 1.7% in August. In the 12 months ended September, the PPI climbed 2.1%. Excluding food and energy, finished goods prices were unchanged in the month, leaving the core index 2.3% higher than a year earlier.
In other news, the Beige Book brushed the portrait of an economy that is again growing modestly. However, in the eyes of the FOMC, the insufficiently strong momentum justifies the current round of QE. Finally, the National Federation of Independent Business’s optimism index was marginally weaker in September, dipping to 92.8 from 92.9 the previous month.
Euro zone – According to Eurostat, seasonally adjusted industrial production in the euro area grew 0.6% in August. German industrial production contracted 0.4% in the month. In Spain, France and Italy, it progressed 1.3%, 1.5% and 1.7%, respectively.