Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

U.S. homebuilding tumbled from more than a 12-year high in September, but single-family home construction rose for a fourth straight month, suggesting the housing market remains supported by lower mortgage rates even as the economy is slowing.

The moderation in economic growth was underscored by other data on Thursday showing manufacturing output falling last month and factory activity in the mid-Atlantic region decelerating in October. The economy is being constrained by a 15-month trade war between the United States and China, which has dented business sentiment and caused a drop in capital expenditures.

Ironically, manufacturing has borne the brunt of the trade tariffs, which the White House argues are necessary to protect industries from what it says is unfair foreign competition. Other parts of the economy are also starting to show cracks from the trade war, with retail sales dropping in September for the first time in seven months and services sector growth slowing.

Story continues below advertisement

Many economists expect the Federal Reserve to cut interest rates for the third time later this month to limit the drag on the economy from the trade war and keep the longest expansion on record, now in its 11th year, on track.

“It inches them forward to taking out a little more insurance to help support the economy that continues to face the headwinds of reduced world trade from tariffs,” said Chris Rupkey, chief economist at MUFG in New York.

Housing starts declined 9.4 per cent to a seasonally adjusted annual rate of 1.256 million units last month as construction in the volatile multi-family housing segment dropped, the Commerce Department said. Data for August was revised higher to show homebuilding accelerating to a pace of 1.386 million units, which was the highest level since June 2007, instead of marching to a rate of 1.364 million units as previously reported.

Economists polled by Reuters had forecast housing starts decreasing to a pace of 1.320 million units in September. Housing starts rose 1.6 per cent on a year-on-year basis in September.

The housing market, the most sensitive sector to interest rates, has perked up in recent months as mortgage rates have plunged from last year’s multi-year highs.

But the sector, which accounts for about 3.1 per cent of the economy, continues to be hampered by land and labor shortages. A survey on Wednesday showed confidence among homebuilders jumped to a more than 1-1/2-year high in October.

The 30-year fixed mortgage rate has dropped more than 135 basis points to an average of 3.57 per cent, according to data from mortgage finance agency Freddie Mac.

Story continues below advertisement

Economists expect a mild rebound in residential investment in the third quarter after it contracted for six straight quarters, the longest such stretch since the 2007-2009 recession.

Single-family homebuilding, which accounts for the largest share of the housing market, rose 0.3 per cent to a rate of 918,000 units in September, the highest level since January. Starts for the volatile multi-family housing segment plunged 28.2 per cent to a rate of 338,000 units in September.

U.S. financial markets were little moved by the data as investors focused on news that Britain had clinched an eleventh-hour deal on its exit from the European Union. The dollar weakened against a basket of currencies, while stocks on Wall Street rose. U.S. Treasury prices fell.


In a separate report on Thursday, the Fed said manufacturing production fell 0.5 per cent last month as a strike by about 48,000 workers at General Motors hammered motor vehicle output. Production at factories increased 0.6 per cent in August.

Excluding motor vehicles, manufacturing output dropped 0.2 per cent after surging 0.7 per cent in August.

Manufacturing has also been hurt by an inventory glut, especially in the automobile sector, and design troubles at Boeing. The fading boost from last year’s $1.5 trillion tax cut package is also compounding manufacturing’s woes.

Story continues below advertisement

Though President Donald Trump announced a temporary truce in the trade war last Friday, which delayed additional tariffs that were due this month, economists saw little change in fortunes at factories without all import duties being rolled back.

Manufacturing production rebounded at a 1.1 per cent rate in the third quarter after declining for two straight quarters. While the increase in the so-called hard data could offer hope that the manufacturing downturn could be close to an end, factory surveys, which are considered leading indicators, remain weak.

“As we would not expect this disconnect to last for long, there remains a downside risk that hard data could weaken further,” said Veronica Clark, an economist at Citi in New York.

In a third report, the Philadelphia Fed said its business conditions index for the region that covers eastern Pennsylvania, southern New Jersey and Delaware fell to a reading of 5.6 in October from 12.0 in September.

The survey’s measures of new orders and employment rose. Its six-month business conditions index jumped to a reading of 33.8 this month from 20.8 in September. The survey’s six-month capital expenditures index increased to 36.4 from a reading of 25.9 in the prior month.

Despite the slowing economy, companies are holding on to their workers. In a fourth report, the Labor Department said initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 214,000 for the week ended Oct. 12.

Story continues below advertisement

Last week’s claims data covered the survey period for the nonfarm payrolls component of October’s employment report.

Claims rose 4,000 between the September and October survey period, suggesting little change in the moderate pace of job growth this month. But the General Motors strike could weigh on payrolls in October.

Striking workers, who did not receive a paycheck during the payrolls survey period, are counted as unemployed. GM and the United Auto Workers union reached a tentative deal on Wednesday to end the month-long strike.

“The claims data may be sending an overly optimistic signal about the upcoming October payroll report,” said Daniel Silver, an economist at JPMorgan in New York. “The near 50,000 workers that have been on strike recently likely will be removed from the October payroll count.”

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies