RBC Financial Group economists say that today’s data releases are disappointing measures of recent economic activity, but point to better news emerging in the quarters ahead.

“The main points are that U.S. labour markets weakened further, Canadian wholesale trade soared but only because of the auto sector, and a leading indicator of U.S. economic activity points to better things to come,” comments RBC.

U.S. initial jobless claims came in higher than expected. About 433,000 Americans filed for unemployment insurance last week, comparable to the previous week’s 441,000 and well above the consensus call for 413,000. “The previous week’s spike was thought to have been mostly due to difficulties in seasonally adjusting data when Thanksgiving and Veterans’ Day closed state offices for two days in an unusual week but this was something that should have largely reversed upon itself with this morning’s update,” says RBC. “Clearly, this is signalling a renewed deterioration in U.S. labour market conditions reflected in other measures such as large scale layoff announcements in recent months and a rise in the unemployment rate to 6.0%.”

The Chicago Fed’s National Activity Index for the month of November provided further evidence that the U.S. economy is slipping, RBC reports. “With a reading of -0.5, this is the fourth consecutive negative number. This index is a weighted average of eighty-five measures of economic activity, but about one-quarter of them have to be estimated before the actual components become released. Being a coincident indicator put together from other data sources, it does not tell us much that we don’t already know: the U.S. economy is in a soft spot.”

On the upside, the Conference Board’s leading indicator of overall U.S. economic activity came in stronger than expected, up 0.7% compared to a consensus call of 0.5%. :This is the first positive movement after five months of declines or flatness. This is encouraging in that it signals better news to come in the U.S. economy at a time when evidence of renewed softness is emerging.”

Wholesale trade activity surged in Canada for October. The increase of 0.6% was triple the expectation, but it came entirely due to the automotive sector. After stripping autos out of the numbers, wholesale trade was actually down by 0.1%. “This one month of weakness must be put in the context of a strong year with wholesale trade up about 5% since the start of the year,” it says. “This is the ninth consecutive monthly increase in inventories but they are just keeping pace with sales activity since the ratio of wholesale inventory-to sales has remained remarkably stable this year. This adds to evidence that inventory investment in the overall Canadian economy is increasingly pointed towards a recovery in business lending activity.”