U.S. economic activity grew at a slower pace than expected in the first quarter of 2023, flashing further signs that the economy is slowing down as recession fears swirl and the Federal Reserve considers more interest rate increases.
The Bureau of Economic Analysis’ advance estimate of first quarter U.S. gross domestic product (GDP) showed the economy grew at an annualized pace of 1.1% during the period, slower than consensus forecasts. Economists surveyed by Bloomberg had the U.S. economy growing at an annualized pace of 1.9% during the first three months of 2022.
The print came in significantly cooler than the previous two quarters, which saw annualized growth at 2.9% and 3.2% respectively.
A slowdown in single-family construction was a factor in Thursday’s lower-than-expected US GDP.
The BEA attributed the quarterly slowdown to wholesale trade, headlined by machinery, equipment and supplies, and manufacturing. A slowdown in single-family construction also propelled the decline in growth rate, per the BEA.
Meanwhile, growth in consumer spending in goods and services helped keep annualized growth positive for the quarter. Motor vehicles and parts led goods spending while healthcare and food services and accommodations led services.
Overall, the slowdown in GDP is in line with other recent economic data and weakening consumer confidence about the economy. Oxford Economics lead US economist Michael Pearce had noted prior to the report that most of the growth would come in the early part of the first quarter. March retail sales came in lower than expected, and some executives have recently said on earnings calls they’re starting to see demand slow down within their businesses.
“The consumer ended the quarter on a sour note, calling into question the sustainability of economic growth moving forward,” Morning Consult Chief Economist John Leer said Thursday. “While private investment may pick back up later this year, it tends to be highly volatile from quarter to quarter. Without a robust consumer, we’re likely to see more volatility and uncertainty in economic activity through the end of the year.”
The first quarter was likely the high water mark for economic growth, according to Oxford Economics. The research team sees marginal GDP growth in the second quarter followed by a recession in the back half of 2023.
“Growth risks are tilted decidedly to the downside as the drivers that buoyed activity at the start of 2023 lose steam while the crunch from tighter credit conditions could be more severe than we’ve already factored into our forecast,” Oren Klachkin, Oxford Economics’ lead US economist, wrote in a note to clients on Thursday.
The report also revealed a 4.9% increase in the personal consumption expenditures price index, excluding food and energy prices. Economists surveyed by Bloomberg had expected a 4.7% increase. The index, known as Core PCE, is a closely watched inflation gauge for the Federal Reserve.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
