U.S. And Canadian Trade Deficits Expanded In February

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

• The U.S. goods and services deficit was $57.3 billion in February 2026, up slightly from $54.7 billion the month before. February exports were $314.8 billion, $12.6 billion higher than January exports while imports for the month were $372.1 billion, $15.2 billion higher than in January The February increase in the goods and services deficit reflected an increase in the goods deficit of $2.5 billion to $84.6 billion and a decrease in the services surplus of $200 million to $27.3 billion. Year-to-date, the overall deficit was down 54.8 percent from the same period in 2025.
• Canada’s merchandise trade activity increased sharply in February. Imports rose 8.4 percent and exports increased 6.4 precent. As a result, Canada’s merchandise trade deficit with the world widened from $4.2 billion in January to $5.7 billion in February, the largest deficit since August 2025. Read the full report at this link.
• Canada’s economy expanded 0.1 percent in January due to strength in goods-producing industries. Collectively, those sectors expanded by 0.2 percent for the second month in a row as growth in mining, quarrying, and oil and gas extraction, along with construction and utilities, more than offset a contraction in manufacturing. Meanwhile, services-producing industries were essentially unchanged.
• U.S. employers added 178,000 jobs in March while the country’s unemployment rate dropped to 4.3 percent, down from February’s 4.4 percent. (The lower jobless rate partly reflected a shrinking labor force since some people stopped looking for work.) The U.S. manufacturing sector showed signs of recovery, adding 15,000 jobs after earlier losses this year.
• The Institute for Supply Management’s manufacturing purchasing managers’ index (PMI) rose to 52.7 in March from 52.4 in February. New orders dropped from 55.8 to 53.5, production rose 1.6 points to 55.1, and employment contracted 0.1 points to 48.7. Thirteen sectors reported growth in March, including primary metals and fabricated metals. The S&P PMI for Canada showed a weakening in that country’s manufacturing sector, meanwhile. Production and employment both fell slightly while new orders were down modestly. Purchasing activity was reduced fractionally as well due to the fact that firms were focused on inventory management.
• The combined value of U.S. distributive trade sales and manufacturers’ shipments for January 2026 was more than $1.97 trillion, up 0.3 percent from December 2025 and 4.5 percent from January 2025. January inventories were down 0.1 percent for the month, but up one percent from January 2025. The total business inventories-to-sales ratio was 1.35, down from 1.4 in January. Read the full report at this link.
• Regional U.S. manufacturing readings were mixed last month. According to the Federal Reserve Bank of Dallas, Texas factory activity increased in March at a slower pace than in February. Specifically, the bank’s production index fell to +6.8 from +12.8 while key measures such as capacity utilization and employment growth were flat or declined. Broader business sentiment remained mixed, with the general business activity index staying near zero and outlook uncertainty reaching its highest level in nearly a year. Expectations for future manufacturing activity remained positive, however. Manufacturing activity in the Midwest showed a modest increase in March, meanwhile, with the Federal Reserve Bank of Kansas City’s composite index rising to +11, its highest level since July 2022. The employment index rebounded from -7 to +6, and the forward-looking future composite index increased from +15 to +16, with production expectations also rising. Finally, manufacturing activity in the mid-Atlantic region improved in March, with the Federal Reserve Bank of Richmond’s composite manufacturing index rising 10 points to zero, its first non-negative reading in over a year. Shipments, new orders, and employment all improved last month. Future indexes for new orders and shipments both fell slightly, but remained in positive territory.
• U.S. business sector labor productivity increased 1.8 percent in the fourth quarter of 2025 as output increased 1.5 percent and hours worked fell 0.2 percent. From the fourth quarter of 2024 to the fourth quarter of 2025, productivity jumped 2.5 percent.
• During the week that ended March 28, 202,000 U.S. residents filed for federal unemployment benefitsfor the first time, a number that was down by 9,000 from the previous week. The four-week moving average of first-time claims was 207,750, a decline of 3,000 from the previous week. The number of people who continued to receive jobless benefits rose to 1.841 million for the week that ended March 21, 2026. That number was up by 25,000 from the week before. The four-week moving average of continuing claims, meanwhile, dropped to 1,838,750, a drop of 7,500 from the week before. In other employment-related news, there were 9 million jobs open in the United States at the end of February 2026.
• In other economic news: U.S. import prices increased 1.3 percent in February while prices for U.S. exports advanced 1.5 percent; U.S. construction spending fell 0.3 percent between December 2025 and January 2026, but was up one percent between January 2025 and January 2026; the University of Michigan’s consumer sentiment index fell to 53.3 in March from 56.6 in February; and the Conference Board’s index of consumer confidence rose to 91.8 in March from 91.0 February.