Canadian Trade Deficit Widens While U.S. Gap Improves

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Meanwhile, here are the major economic headlines from the last week:

• Canada’s merchandise exports decreased 4.7 percent in January while imports were down 1.1 percent. As a result, the country’s merchandise trade deficit with the world widened from $1.3 billion in December 2025 to $3.6 billion in January 2026. Exports declined in six of the 11 product sectors with exports of passenger cars and light trucks (down 32.5 percent) leading the way. Exports of motor vehicles and parts, which fell 21.2 percent to $5.4 billion, were at their lowest level since September 2021.
• The U.S. trade deficit fell to $54.5 billion in January 2026, a decline of $18.4 billion from in December 2025. January exports were $302.1 billion, $15.8 billion more than in December while imports were $356.6 billion, $2.6 billion less than in December. The drop in the overall trade deficit reflected a decrease in the goods deficit of $17.5 billion to $81.8 billion and an increase in the services surplus of $1 billion to $27.3 billion. Year-over-year, the goods and services deficit decreased $73.9 billion, or 57.6 percent, from January 2025. Read the full report.
• The Canadian economy lost 84,000 jobs in February and the nation’s jobless rate rose to 6.7 percent. It was the worst monthly jobs loss since COVID-19 pandemic shutdowns. Employment mostly fell in the goods and services-producing industries. The wholesale and retail trade shed 18,000 jobs while construction employment fell by 12,000 and the manufacturing sector lost 9,200 lost jobs. Read the full report.
• Canadian manufacturing sales fell three percent to C$68.7 billion from December 2025 to January 2026. Sales, which declined in 11 of 21 subsectors and were led by drops in transportation equipment (down 18.2 percent) and machinery (down 5.6 percent), were at their lowest level since May 2025. One bright spot: sales in the miscellaneous manufacturing subsector increased 16.8 percent to their highest level on record.
• The National Association of Manufacturers’ Outlook Survey for the first quarter of 2026 revealed that optimism appears to be rising across the sector. Three-quarters of manufacturers reported a positive outlook, a number that was up from the previous quarter and slightly above the historical average. Trade uncertainty continues to rank as manufacturers’ top business challenge, however, and the survey also underscored how central North American supply chains are to the industry. Indeed, more than half of manufacturers said they rely on Canada or Mexico for critical inputs. Read the full report.
• According to the U.S. Bureau of Labor Statistics, the number of job openings in the country was little changed at 6.9 million in January. In other U.S.-jobs-related news: during the week that ended March 7, 213,000 U.S. residents filed for federal unemployment benefits for the first time, a number that was down by 1,000 from the previous week. The four-week moving average of first-time claims was 212,000, a decline of 4,000 from the previous week. The number of people who continued to receive jobless benefits rose to 1.850 million for the week that ended Feb. 28, 2026. That number was down by 21,000 from the week before. The four-week moving average of continuing claims, meanwhile, dropped to 1,851,750, a drop of 500 from the week before.
• In other economic news: real average hourly earnings for all U.S. employees increased 0.2 percent from January 2026 to February 2026; the U.S. Consumer Price Index increased 0.2 percent between January and February 2026 and 2.4 percent between February 2025 and February 2026; and the number of existing homes sold in the United States increased 1.7 percent between January and February 2026, but fell 1.4 percent year-over-year.