This week was loaded with mid-tier economic data, and the results were not inspiring. Here’s a brief rundown, where bad news actually felt like bad news:
- Retail spending: U.S. retail sales fell 1.1% in December, with downward revisions to boot. Core sales excluding autos, gas and building materials (i.e., the GDP feed) were down 0.7%. Sales excluding gas stations, which might best reflect consumer behaviour, has stalled out at just 0.7% annualized over the past six months. Of course, crumbing goods prices mean underlying volumes are not as bad. Also, Canadians seem to have held up better with early indications pointing to a solid volume gain in the month.
- Housing: Canadian home prices were still correcting through December, while U.S. homebuilders continue to report very depressed traffic despite a small uptick to start the year, and permits for new construction continue to fall.
- Factory activity: U.S. industrial production fell 0.7% in December, with manufacturing output down from a year ago for the first time since the height of the pandemic. And, regional surveys point to continued weakness in January.
Stepping back, stocks peaked just over a year ago in early January 2022. Despite the recent rally, it’s worth noting that the current path of this bear market is very much in-line with past norms.
|Table 1 - Market Performance|
|Source: BMO Economics, Bloomberg|