Canada: November Consumer Price Index Falls 0.2%

– In November, the consumer price index fell 0.2% dragging the year-on-year inflation rate down four ticks to 0.8%. In seasonally adjusted terms, the CPI slid 0.2% despite higher prices in five of the eight broad expenditure categories. A sharp decline in the transportation category (1.2%) and a dip (0.1%) in the shelter component dwarfed increases elsewhere. The BoC’s measure of core inflation was flat, causing the y/y core rate to slip a tick to 1.2%.

In October, GDP grew a mere 0.1% in line with consensus expectations. The goods sector was flat after sagging 0.3% the prior month. Strength in oil and gas was offset by weakness in mining, construction and manufacturing. The service sector expanded 0.1% on impetus from the wholesale, retail, and finance/real estate/insurance segments. These more than offset declines elsewhere, including a 1.6% drop in the arts/recreation segment. Still in October, wholesale trade rose 0.9% versus consensus expectations for a 0.5% gain. However, the prior month was revised down a tick to -1.5%. Six of the seven subsectors saw increases. In real terms, wholesale trade advanced 0.8%.

In November, the Teranet–National Bank National Composite House Price Index rose 3.3% on a y/y basis. However, 12-month price changes varied widely across the 11 metropolitan areas covered (from +7.3% in Halifax to -1.7% in Victoria). On a monthly basis, the index fell 0.4% for a third drop in a row. According to the Canadian Real Estate Association, existing-home sales were down 1.7% in the month.

Again in October, retail sales sprang 0.7% after being revised up a tick to +0.2% the prior month. Stronger sales were recorded in 8 of the 11 subsectors. Auto dealership revenues jumped 1.6% buoyed by sales of new vehicles. Excluding autos, sales rose 0.5% overshooting consensus expectations by a long shot. In real terms, overall retail sales advanced 0.3% after retreating for two straight months.

United States – In November, existing-home sales rose 5.9% to 5 million units from a downwardly revised 4.76 million the month before. This marked a new high since 2009 and was well above consensus expectations. Sales of both singles (+5.5%) and multiples (+9.1%) were up in the month. The number of months’ supply of homes at the current sales rate sank to 4.8, its lowest level since 2005. The median sales price hit a 4-month high of $180,600.

In December, the New York Fed’s Empire State index of manufacturing activity fell to -8.1 from -5.2 the prior month. This marked a fifth straight month in negative territory. The deterioration was largely due to the new-orders sub-index sinking back into negative territory (-3.7). Meanwhile, the Philadelphia Fed index of manufacturing activity continued to seesaw, rebounding sharply to 8.1, a high point since April. The index had slumped in November after returning to positive territory in October.

The third GDP estimate for Q3 came in at 3.1% topping consensus expectations by three ticks. However, growing evidence of a sharp deceleration in the current quarter leads us to expect growth of only about 1% in Q4. If so, it would constitute the worst quarterly performance this year. Again in November, personal consumption expenditures grew 0.4% in line with consensus expectations. Personal income climbed 0.6% in the month beating expectations of a 0.3% gain. The PCE price index fell 0.2% month over month, leaving the index up 1.4% from twelve months earlier. PCE core prices were up 1.5% over the same period.

Still in November, durable-goods orders jumped 0.7%. October orders were revised up from flat to +1.1%. Demand for capital goods excluding defence and aircraft rose 2.7% after shooting up a revised 3.2% in October.

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