U.S. Trade Gap Narrows While Canadian Deficit Widens

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Meanwhile, here are the major economic headlines from the last two weeks:

• U.SS. imports of unwrought aluminum fell by 25.6 percent between June 2024 and June 2025, according to S&P Global Market Intelligence Global Trade Analytics. That vast majority of imports, more than 50 percent, came from Canada. Read more at this link.
• The U.S. goods and services trade deficit was $60.2 billion in June, down $11.5 billion from May. Exports fell slightly that month, as did imports. The June decrease reflected a decline in the goods deficit of $11.4 billion and an increase in the services surplus of $0.1 billion. Year-to-date, the goods and services deficit is up $161.5 billion, or 38.3 percent, from the same period in 2024.
• In June, Canada’s merchandise imports were up 1.4 percent while exports increased 0.9 percent. As a result, Canada’s merchandise trade deficit with the world widened from $5.5 billion in May to $5.9 billion in June.
• U.S. Industrial production fell 0.1 percent in July. Manufacturing output was unchanged while the index for mining declined 0.4 percent and the index for utilities dropped 0.2 percent. At 104.0 percent, total industrial production was up 1.4 percent from July 2024. Capacity utilization moved down to 77.5 percent in July, meanwhile, a rate that is 2.1 percentage points below its historical average.
• New orders for U.S. manufactured goods fell 4.8 percent to $611.7 billion, but shipments rose 0.5 percent to $602.4 billion. Unfilled orders increased one percent to nearly $1.47 trillion and the unfilled orders-to-shipments ratio was 7.03, up from 6.98 in May. Inventories also were up, increasing 0.2 percent to $945.6 billion while the inventories-to-shipments ratio was unchanged from May at 1.57.
• In Canada, manufacturing sales rose 0.3 percent to $68.5 billion between May 2025 and June 2025, but were down 2.7 percent between June 2024 and June 2025. For the month, sales rose in 13 of 21 subsectors, led by the petroleum and coal (up 11.8 percent) and food (up 2.5 percent) product subsectors. These increases were partially offset by a five percent decline in the transportation equipment subsector, however.
• U.S. distributive trade sales and manufacturers’ shipments increased 0.5 percent from May 2025 to June 2025 and 3.8 percent from June 2024 to June 2025. Inventories were up 0.2 percent for the month and 1.6 percent year-over-year. The total business inventories to sales ratio fell to 1.38 in June 2025 from 1.41 the year before. Read the full report at this link.
• According to the Federal Reserve Bank of New York, manufacturing activity in its region expanded in August for a second month in a row. The bank’s general business conditions index increased six points to 11.9, which is its highest level since November 2024. The reading for new orders was up 13 points while the shipments index held steady at +12.2. The readings for unfilled orders and inventories fell, however, with the inventories index dropping 22 points. Read the full report at this link.
• U.S. wholesale sales increased 0.3 in June to $698.5 billion. Durable goods sales were up 0.5 percent while nondurable goods sales rose 0.1 percent. Inventories grew 0.1 percent to $906.3 billion and the inventories-to-sales ratio remained at 1.30, down from 1.35 a year earlier.
• The Canadian economy shed 41,000 jobs in July while the nation’s employment rate declined 0.2 percentage points to 60.7 percent. The jobless rate was unchanged at 6.9 percent. Employment was down across several industries, but declines were led by information, culture and recreation, which lost 29,000 jobs, and construction, which eliminated 22,000 jobs. Total hours were unchanged, but average hourly employee wages increased 3.3 percent from July 2024 to July 2025.
• U.S. nonfarm business sector labor productivity increased 2.4 percent from the first quarter of 2025 to the second quarter. Output was up 3.7 percent while hours worked increased 1.3 percent. Between the second quarter of 2024 and the second quarter of 2025, labor productivity rose 1.3 percent.
• The number of people who claimed U.S. unemployment benefits for the first time ever was 224,000 during the week that ended Aug. 9. That number was up by 1,000 from the previous week. Averaged over the past four weeks, the number of first-time claims was 221,750, an increase 750 from the week before. In all, nearly 1.953 million people claimed federal unemployment benefits during the week that ended Aug. 2, a figure that was down 15,000 from the previous week.
• The National Federation of Independent Business’s Small Business Optimism Index rose 1.7 points in July to 100.3, slightly above the historical average of 98. Respondents reported better business conditions and said it is a good time to expand. Read the full report at this link.
• In other economic news: the U.S. consumer price index increased 0.2 percent from June 2025 to July 2025 and 2.7 percent year-over-year; the U.S. producer price index rose 0.9 percent from June to July and 3.3 percent year-over-year; and U.S. import prices jumped 0.4 percent in July while export prices rose 0.1 percent.