Back in the economy, the data were generally positive. Retail sales were solid in Canada (September) but lagged expectations for October in the U.S. While the latter was up only 0.3%, it’s probably not the area of the economy to be agonizing about at this point—sales were almost 5% above pre-COVID levels in the month, and have been a major driver of the recovery. Be on the lookout for some choppy data through the holiday shopping season, as new behavior could be impacted by old seasonal factors.
Elsewhere, housing markets in both Canada and the U.S. remain extremely strong. In Canada, sales on a year-to-date basis are now up 8.6% through October, and this year’s total volume looks like it will handily eclipse 2019. Very limited supply in areas that are seeing an influx of demand is boosting prices, with the pace across many markets ranging from solid to historic. In the U.S., we’re seeing record-high homebuilder confidence, near-2005 levels of existing home sales, and robust price gains.
In the factory space, production was up solidly in October, but remains about 6% below pre-COVID levels. It remains to be seen how 2020Q4 and 2021Q1 play out given ramping restrictions and uncertainty about a U.S. fiscal package. Suffice it to say the market might be (or should be) pricing in some more near-term weakness in exchange for more medium-term strength. Perhaps that’s one reason why stocks have held up well.