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Report from
North America
US housing market weakened further in August
The pace of new construction continued to slow in August
even as falling mortgage rates offer a glimpse of hope for
the moribund housing market.
The US Department of Commerce reported that single-
family homebuilding plunged to a near 2-1/2-year low in
August amid a glut of unsold new houses, suggesting the
housing market could remain an economic headwind this
quarter. Permits for future single-family home
construction also dropped last month to the lowest level in
more than two years. Some economists said the decline
was necessary to manage new housing inventory, currently
near levels last seen in late 2007.
"Builders have been plagued with excessive new home
inventories for going on about 18 months now," said
Stephen Stanley, Chief US economist at Santander US
Capital Markets. "They have made a few half-hearted and
ineffective stabs at slowing construction activity, but
persistent hopes that homebuyer demand would perk up
have been repeatedly dashed. It is past time that builders
bite the bullet and cut back on the number of homes they
are starting to get inventories under control."
Single-family housing starts, which account for the bulk of
homebuilding, fell 7.0% to a seasonally adjusted annual
rate of 890,000 units last month. That was the lowest level
since April 2023.
Groundbreaking for single-family housing projects
tumbled 17.0% in the densely populated South, where
economists said most of the over-building had occurred
amid a labor market boom. But the region has experienced
a significant decline in job openings this year.
Homebuilding rose in the Northeast, Midwest and West.
Starts for housing projects with five units or more
decreased 11.0% to a rate of 403,000 units. Overall
housing starts dropped 8.5% to a rate of 1.307 million
units.
A National Association of Home Builders survey showed
sentiment among homebuilders remained subdued in
September, though expectations for higher sales over the
next six months improved. Builders are increasingly
cutting prices and offering other incentives to reduce the
inventory bloat.
One hope for a better market is falling interest rates. At its
September meeting, the US central bank cut its benchmark
overnight interest rate and projected a steady pace of
reductions for the rest of 2025 to help the struggling labor
market. The rate on the popular 30-year mortgage has
dropped to an 11-month low of 6.35% from around 7.04%
in mid-January, data from mortgage finance agency
Freddie Mac showed.
August housing starts also fell sharply in Canada, dipping
to a level below the six-month trend line--a sign that
construction could slow in the coming months. Housing
starts across Canada came in at a seasonally adjusted
annualized rate of 245,791 units, a 16% drop from the
month before, the Canada Mortgage and Housing
Corporation reported. Second-quarter data collected by the
Canadian Home Builders Association indicated a
"decidedly pessimistic" outlook for sales among its
members.
See: https://www.census.gov/construction/nrc/current/index.html
Federal Reserve cuts interest rates, signals further cuts
The US Federal Reserve cut interest rates by a quarter of a
percentage point in September and indicated it will
steadily lower borrowing costs for the rest of this year, as
policymakers responded to concerns about weakness in the
job market.
The rate cut, along with projections showing that two
more quarter-percentage-point reductions are anticipated
at the remaining two policy meetings this year, indicates
Fed officials have begun to downplay the risk that the
administration's voluble trade policies will stoke persistent
inflation, and are now more concerned about weakening
growth and the likelihood of rising unemployment.
The cut, the first move by the policy-setting Federal Open
Market Committee since December, lowered the policy
rate to the 4.00%-4.25% range.
See:
https://www.federalreserve.gov/newsevents/pressreleases/monetary20250917a.htm
US economy grew faster in the second quarter than estimated
The US economy expanded faster between April and June
than previously estimated as growth bounced back after
slumping in the first quarter.
The US Department of Commerce said that the country's
gross domestic product, the nation's output of goods and
services, grew at a 3.3% annual pace in the second quarter
after shrinking 0.5% in the first three months of 2025. The
agency had initially estimated second-quarter growth at
3%. "There was an upward revision to business investment
in structures, equipment and intellectual property, as well
as consumer spending," said Ryan Sweet, Chief US
economist at Oxford Economics.
"Investment related to AI is helping mask some of the
weakness elsewhere in the economy, but the good news is
that there is little sign that this support is set to fade
anytime soon."
The first-quarter GDP drop, the first retreat of the US
economy in three years, was mainly caused by a surge in
imports, which are subtracted from GDP as businesses
scrambled to bring in foreign goods ahead of new US
tariffs taking effect. That trend reversed as expected in the
second quarter. Imports fell at a 29.8% pace, boosting
April-June growth by more than 5 percentage points.
According to the Atlanta Federal Reserve Bank's
GDPNow forecasting tool, the economy is growing at
2.2% clip this year.
See: https://www.bea.gov/news/2025/gross-domestic-product-
2nd-quarter-2025-second-estimate-and-corporate-profits-
preliminary
US job growth weakens
US hiring slowed further in August as employers added a
disappointing 22,000 jobs and the unemployment rate rose
from 4.2% to 4.3%, the highest level since October 2021
reported the Bureau of Labor Statistics. Also worrisome:
payroll gains for June and July were revised down by a
total 21,000 and now reveal the economy shed 13,000 jobs
in June,- the first job losses since the depths of the
pandemic in December 2020.
"August's employment report confirmed that the labour
market has headed off a cliff-edge," economist Bradley
Saunders of Capital Economics wrote in a note to clients.
Ahead of the report, economists surveyed by Bloomberg
estimated that 75,000 jobs were added last month.
Healthcare, a reliable jobs engine the past couple of years,
again drove the payroll gains with 31,000 and leisure and
hospitality, which includes restaurants and bars, added
28,000. But manufacturing, which has been buffeted by
the tariffs, lost 12,000 and is down 78,000 jobs this year.
See: https://www.bls.gov/news.release/empsit.nr0.htm
Consumer sentiment falls again on inflation fears
US consumer sentiment fell for a second straight month in
September as consumers saw rising risks to business
conditions, the labor market, and inflation.
The University of Michigan's Surveys of Consumers said
its Consumer Sentiment Index fell to 55.4 this month, the
lowest since May, from a final reading of 58.2 in August.
Economists polled by Reuters had been expecting a
reading of 58.0, little changed from the month before.
"Consumers continue to note multiple vulnerabilities in
the economy, with rising risks to business conditions,
labor markets, and inflation," Joanne Hsu, the director of
the Surveys of Consumers, said. "Trade policy remains
highly salient to consumers, with about 60% of consumers
providing unprompted comments about tariffs during
interviews, little changed from last month."
Households have generally been downbeat about the
economy over the course of 2025 on concerns that
President Donald Trump's aggressive tariff measures will
cause goods prices to rise and eat into their purchasing
power.
See: https://www.sca.isr.umich.edu/
US manufacturing continues to slide
Economic activity in the manufacturing sector contracted
in August for the sixth consecutive month, say the nation's
supply executives in the latest ISM Manufacturing PMI
Report. ISM’s “Manufacturing PMI” registered 48.7% in
August, a 0.7-percentage point increase compared to the
48% recorded in July. A rating below 50% indicates
contraction while a rating over 50% indicates growth.
US job growth weakens
US hiring slowed further in August as employers added a
disappointing 22,000 jobs and the unemployment rate rose
from 4.2% to 4.3%, the highest level since October 2021
reported the Bureau of Labor Statistics. Also worrisome:
payroll gains for June and July were revised down by a
total 21,000 and now reveal the economy shed 13,000 jobs
in June,- the first job losses since the depths of the
pandemic in December 2020.
"August's employment report confirmed that the labour
market has headed off a cliff-edge," economist Bradley
Saunders of Capital Economics wrote in a note to clients.
Ahead of the report, economists surveyed by Bloomberg
estimated that 75,000 jobs were added last month.
Healthcare, a reliable jobs engine the past couple of years,
again drove the payroll gains with 31,000 and leisure and
hospitality, which includes restaurants and bars, added
28,000. But manufacturing, which has been buffeted by
the tariffs, lost 12,000 and is down 78,000 jobs this year.
See: https://www.bls.gov/news.release/empsit.nr0.htm
Consumer sentiment falls again on inflation fears
US consumer sentiment fell for a second straight month in
September as consumers saw rising risks to business
conditions, the labor market, and inflation.
The University of Michigan's Surveys of Consumers said
its Consumer Sentiment Index fell to 55.4 this month, the
lowest since May, from a final reading of 58.2 in August.
Economists polled by Reuters had been expecting a
reading of 58.0, little changed from the month before.
"Consumers continue to note multiple vulnerabilities in
the economy, with rising risks to business conditions,
labor markets, and inflation," Joanne Hsu, the director of
the Surveys of Consumers, said. "Trade policy remains
highly salient to consumers, with about 60% of consumers
providing unprompted comments about tariffs during
interviews, little changed from last month."
Households have generally been downbeat about the
economy over the course of 2025 on concerns that
President Donald Trump's aggressive tariff measures will
cause goods prices to rise and eat into their purchasing
power.
See: https://www.sca.isr.umich.edu/
US manufacturing continues to slide
Economic activity in the manufacturing sector contracted
in August for the sixth consecutive month, say the nation's
supply executives in the latest ISM Manufacturing PMI
Report. ISM’s “Manufacturing PMI” registered 48.7% in
August, a 0.7-percentage point increase compared to the
48% recorded in July. A rating below 50% indicates
contraction while a rating over 50% indicates growth.
Both the Wood Products sector and the Furniture &
Related Products sector reported contraction in August.
Among the sectors surveyed by ISM, seven reported
growth in August while 10 reported contraction.
Among comments gathered from ISM survey respondents,
one wood products executive called the current domestic
market "very tentative, with home building and
remodeling not very active at all. Inflation, among other
factors, is starting to impact consumer buying power,
leading to negative signs for our order files. International
markets are upended due to the unpredictability of on-
again, off-again tariff activity."
See: https://www.ismworld.org/supply-management-news-and-
reports/reports/ism-pmi-reports/
Cabinet sales continue to fall
US cabinet sales continue to decrease, says the Kitchen
Cabinet Manufacturers Association in its July Trend of
Business report. July sales were down 6.0% from the
previous month and down 5.2% from July 2024 numbers.
Custom sales were up 1.1% from last month but down
0.7% from a year ago.
Semi-custom sales fell 7.5% from June to July and were
off 5.9% from July 2024. Stock sales plunged 14.3% for
the month and were 13.8% under July 2024 totals. For the
year so far, cabinet sales are down 6.3% versus last year.
See: https://kcma.org/sites/default/files/2025-08/July%202025%20TOB.jpg
Canada drops two lumber-trade complaints against US
Canada has withdrawn two legal complaints against
Washington related to US duties on softwood lumber as
Prime Minister Mark Carney tries to reach a truce with the
Trump administration on the decades-long trade row
focused on forest products.
This marks another step back from the Carney-led
government in terms of confronting the US on its
protectionist trade policy.
A spokeswoman for Canada's foreign department said
officials made the decision after consulting with the
domestic lumber industry and regional governments, "and
it reflects a strategic choice to maximize long-term
interests and prospects for a negotiated resolution with the
United States."
At present, Canadian officials say talks with the US over
tariffs ares focused on seeking relief for specific key
sectors, such as lumber, aluminum, steel and automotives.
Canada is the lone member of the Group of Seven
economies that does not have a broad deal with the US
over tariffs. This summer, Carney unveiled a $900 million
support package for the lumber sector, due to the pressure
from US duties.
The softwood-lumber complaints, which date back to last
decade, deal with duties the US slaps on Canadian
softwood lumber.
The US decided in August to nearly triple the current anti-
dumping levies on Canadian softwood lumber to more
than 20%.
The US has repeatedly said tariffs on Canadian lumber are
necessary because Canadian governments were
subsidising the domestic forest-products industryand that
the Canadian sector was dumping or selling goods into the
US at a lower-than-normal priced lumber into the US
market.
See: https://www.marketwatch.com/story/canada-drops-two-
lumber-trade-complaints-against-u-s-744d082a
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