Jobs, Jobs, Jobs: U.S. economy smashes forecasts with 250,000 jobs added
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Jobs, Jobs, Jobs: U.S. economy smashes forecasts with 250,000 jobs added

Author: The editor's desk

November 6, 2018

A recap of last week’s top economic news and what’s to come

U.S. economy smashes forecasts with 250,000 jobs added, trade deficit widens

  • U.S. hiring rebounded by more than forecast in October, annual wage gains topped 3% for the first time since 2009, and the jobless rate held at a 48-year low, signaling the labor market will keep driving consumption and economic growth. Nonfarm payrolls rose 250,000 after a downwardly revised 118,000 gain, the Labor Department said last week. Analyst estimates called for an increase of 200,000 jobs. Meanwhile, average hourly earnings for private workers advanced 3.1% from a year earlier and the unemployment rate was unchanged from September at 3.7%, both matching projections.
  • The U.S. trade deficit widened more than forecast in September to a seven-month high as imports expanded and the merchandise gap with China hit a record amid trade tensions. The gap for goods and services increased 1.3% from the prior month to $54 billion, Commerce Department data showed Friday. Analysts were predicting a deficit of $53.6 billion. Imports and exports both rose 1.5%. The monthly report also showed trade imposed the biggest drag on growth in 33 years amid tariffs on China and counter-levies by the Asian nation. Overall exports rose to $212.6 billion, including gains in petroleum products, gold, oil and aircraft. Imports increased to $266.6 billion, boosted by a range of capital and commercial goods. The overall trade gap for goods increased to $76.3 billion.

Canada sees trade surplus shrink, GDP inches up in August, jobs picture mixed

  • Canada’s economy showed sluggish trade flows in September with both exports and imports recording back-to-back monthly drops, according to Statistics Canada, which also revised its reported surplus in August. Canada posted a $416 million trade deficit in September, down from a revised $551 million deficit in August as exports slumped. Exports were down 0.2%, after dropping 1.5% in August, while imports were down 0.4%. Economists predicted a September surplus of $200 million. Meanwhile, the federal agency revised its August import numbers to account for the late documentation of three icebreakers. The change meant the country ran a deficit that month instead of a previously reported $526 million surplus.
  • The Canadian economy added 11,200 jobs in October on higher full-time hiring, and the unemployment rate dipped to 5.8%, although wage growth was sluggish, Statistics Canada data showed last week. Analysts had forecast a gain of 10,000 positions and for the jobless rate to remain at 5.9%. Although full-time jobs rose by 33,900 compared to a loss of 22,600 part-time positions, the labour participation rate dropped to 65.2%, its lowest since October, 1998. Meanwhile, the average year-over-year wage growth of permanent employees – a figure closely watched by the Bank of Canada – fell to just 1.9%, the lowest since the 1.7% recorded in August 2017.
  • Statistics Canada says real gross domestic product edged up 0.1% in August, the seventh consecutive month to see an increase and ahead of analysts expectations. Growth in oil and gas extraction and the finance and insurance sector helped to more than offset declines in 12 of the 20 industrial sectors tracked by the agency. The mining, quarrying and oil and gas extraction sector rose 0.9%, while the oil and gas extraction subsector gained 1.9%. The finance and insurance sector rose 1.0% in August, the largest monthly gain since May 2017.
  • The National Energy Board says renewable sources of electricity in Canada will grow over the next 20 years but so will Canadian oil and natural gas production. In a new report titled Canada’s Energy Future, the NEB says Canadians will learn to use less energy, even as the economy grows, through to 2040. Under its base case, the NEB predicts total Canadian electricity generation will increase by about 12% from 2017 to 2040, with most of the new sources from natural gas, wind or hydro. It forecasts domestic oil production will grow by 58% and natural gas production will grow 29% between now and 2040, while domestic energy demand grows by just 5% – or less.

Chinese factories humming, India climbs in terms of ease of doing business

  • Chinese factory activity expanded slightly in October despite the trade dispute with the U.S., a survey of small and medium-sized enterprises in China showed. Caixin and IHS Markit reported October Purchasing Managers’ index (PMI) was 50.1 for October, beating analysts’ expectations. Analysts had expected activity to dip slightly to 49.9, from 50.0 in September. A reading above 50 indicates expansion, while a reading below that signals contraction. Despite the better-than-expected headline number and slight expansion in manufacturing activity for October, a detailed reading of the survey showed softness in the Chinese economy. The sub-index for new orders improved from a two-year low in September but remained in negative territory. New export sales dropped for the seventh straight month.
  • India climbed 23 spots from a year ago to rank 77 out of 190 countries in the World Bank’s latest report on the ease of doing business. It was also among the top 10 most improved economies along with countries such as China, Djibouti and Azerbaijan, according to the bank’s Doing Business 2019 report. The bank noted a series of reforms in India made it easier for companies to get construction permits, pay taxes and trade across borders.

What’s to come

Insight into Canada’s housing market, U.S. Fed announces rate decision

In Canada, new figures will be released on September’s building permits and October’s housing starts. In the U.S the Fed will announce its rate decision on Thursday.

Source: BMO Economics, TD Economics, Reuters, CNBC as of November 2, 2018
Source: Bloomberg, as of November 2, 2018

 

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