Market Insight January 2023

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January 8, 2023 No comments

Economic Growth, Manufacturing Readings Improve At End Of 2022

Here are the major economic headlines from the last week of 2022: 

  • Real gross domestic product (GDP) in the U.S. increased at an annual rate of 3.2% in the third quarter of 2022 according to the federal government’s third and final estimate. In the second estimate, the increase in real GDP was just 2.9%. The updated estimates primarily reflected upward revisions to consumer spending and nonresidential fixed investment. In related news: The Conference Board’s Leading Economic Index, a key indicator of future growth, fell 1% in November 2022 to 113.5 while the Federal Reserve Bank of Chicago’s National Activity Index, another predictor of growth, fell to -0.05 in October, down from +0.17 in September.
  • Canada’s gross domestic product expanded by 0.1% from September 2022 to October 2022. The service sector grew for the six month in a row while goods-producing industries contracted for the fourth straight month. Leading the decline was a 2% drop in the oil and gas sector.
  • The manufacturing sectors in some U.S. regions seemed to strengthen last month while other parts of the country continued to struggle. According to the Federal Reserve Bank of Kansas City, manufacturing activity in the Midwest declined in December at a slightly faster pace than it did during November. Specifically, the composite index was -9 in December, down from -6 in November. The slower pace in factory growth was driven by decreased activity in printing, wood products, machinery manufacturing, and food manufacturing.
  • During the same month, however, the Texas manufacturing sector improved. The Federal Reserve Bank of Dallas said growth in its region resumed in December. The bank’s production index rose nine points to +9.7 and the new orders reading rose to -9.2 from -20.9. Capacity utilization in Texas also returned to positive territory. Additionally, the Federal Reserve Bank of Richmond reported that its composite manufacturing index increased to +1 in last month from -9 in November. Each of its three component indexes—shipments, new orders and employment—improved.

Source: MSCI, 01.02.2023

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