In Quebec, housing starts rose 18% in December to 44,400 units, its highest level of the year. For all of 2009, starts fell 12%, the smallest regional decline in Canada (starts fell by one-third in Ontario and the prairies and by over one-half in BC).
Manufacturing sales in November edged up after a 7% jump in October, as increases for chemicals (notably medicinals) and petroleum offset a drop in aerospace.
Manufacturing sales in the prairies continued to rebound with a fourth straight increase, although they remain 25% below their peak in July 2008.
Petroleum in Alberta has led the upturn, rising nearly 50% since July as prices firmed and new projects started. Both housing starts and retail sales retreated after two months of modest gains.
Household demand in BC continued to recover. Retail sales rose 0.6% in November, the only increase in Canada and reinforcing gains of nearly 2% in each of the previous three months. Housing starts rose 10% for their third straight advance.
Housing starts in Ontario resumed their upward trend after a setback in November. The 24% increase in fourth-quarter starts was the most in Canada. However, retail sales slipped 0.8% in November, the largest drop of any region. Manufacturing sales also fell 0.8% due to a softening in the auto industry.
In the United States, real GDP grew by 1.4% in the fourth quarter after a 0.6% gain in the third and the most since the second quarter of 2003. Household spending led the third-quarter upturn, but was more subdued in the fourth (partly because auto sales levelled off following the expiry of the ‘cash for clunkers’ program).
Instead, business spending took the lead. Investment rose 0.7%, its first advance after plunging 21% between the second quarter of 2008 and the third quarter of 2009.
Firms also continued to slow the pace of inventory liquidation to one-quarter its peak rate of $160 billion in the second quarter. Exports rose at a steady clip of nearly 5%, while imports slowed.
Household spending ended the year on a weak note, following the expiry of a tax credit for first-time home buyers as well as poor weather. Existing home sales fell 17% after sales jumped just before the expiry of the credit (since then the credit was extended and expanded).
Still, sales remain nearly 20% ahead of their lows early in 2009, and median home prices posted their first year-over-year increase since mid-2006. Housing starts fell 4%, especially in the Northeast and Midwest which were hit by several winter storms.
However, permits rose 11%, a sign that the lull in construction was temporary. Retail sales dipped 0.3%, capping a solid gain of nearly 3% in the last three months of 2009. Sales were 5% ahead of a year-ago, a marked improvement from the 10% drop as recently as May.
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