Canada’s Trade Deficit Improves While U.S. Trade Gap Widens

Connecting the Dots monitors all major economic announcements in the United States and Canada, but the Metals Service Center Institute also offers industrial metals industry-specific data products that provide much deeper analysis and insight. Visit MSCI’s website and click on industry data to learn more about our Metals Activity Report (MAR), Momentum Monitors, and Economic Pulse.

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

• The U.S. goods and services trade deficit was $74.6 billion in April, up $6 billion from $68.6 billion in March. The increase reflected a rise in the goods deficit of $5.9 billion and a decrease in the services surplus of $100 million. Year-to-date, the goods and services deficit is up $5.5 billion, or two percent, from the same period in 2023. Read the full report here.
• Canada’s merchandise exports increased 2.6 percent from March 2024 to April 2024 while imports rose 1.1 percent. The country’s merchandise trade deficit with the world narrowed from $2 billion in March to $1 billion in April. Read the full report here.
• According to a survey conducted earlier this year by Statistics Canada, the leading challenge the country’s businesses expect to face in the second quarter of 2024 is rising inflation. Nearly 55 percent of company leaders expect prices to continue to rise. The second biggest concern cited was the rising costs of inputs, which include labor, capital, energy, and raw materials, followed by higher interest rates and debt costs, which were the third most pressing anxiety.
• New orders for U.S. manufactured goods increased 0.7 percent in April. Shipments rose one percent to $590.2 billion while the unfilled orders-to-shipments ratio was 7.10, down from 7.20 in March. Inventories were up 0.1 percent and the inventories-to-shipments ratio was 1.45, down from 1.47 in March.
• The S&P Global Canada manufacturing purchasing managers’ index (PMI) declined to 49.3 in May from 49.4 in April. The reading now has been below the 50-point mark that indicates contractions for 13 months. The report, available here, said the continued weakness of the headline index principally reflected continued declines in both output and new orders.
• The S&P Global PMI for the United States increased to 51.3 in May, indicating a modest improvement in the sector’s health that was driven by expansion in new orders and increased business confidence. Read the full report here. The Institute for Supply Management’s PMI fell, meanwhile, declining to 48.7 from 49.2. The index has now been below 50 for 18 of the last 19 months. New orders were down sharply, to 45.4 from 49.1, but employment index did improve. Read that report here.
• Manufacturing readings for various regions of the United States continued to be mixed for the month of May. According to the Federal Reserve Bank of Richmond, the manufacturing sector in the Central Atlantic region of the United States remained sluggish last month even though the bank’s composite index increased from -7 in April to 0 in May due to improvements in shipments and new orders. The reading for employment did fall. Meanwhile, the Federal Reserve Bank of Dallas said factory activity in Texas edged down in May. The production index declined from +4.8 in April to -2.8 last month while others measures of manufacturing activity, including new orders and capacity utilization, also suggested weaker activity. Perceptions of broader business conditions also continued to worsen in Texas in May as well.
• U.S. employers added 272,000 jobs in May while the country’s unemployment rate remained steady at four percent. Employment continued to trend up in several industries, led by healthcare; government; leisure and hospitality; and professional, scientific, and technical services sectors. Durable goods manufacturers shed 2,000 jobs for the month while nondurable goods manufacturers added 10,000 jobs.
• Canadian employers added 27,000 jobs in May, but the country’s unemployment rate rose to 6.2 percent, up 0.1 percentage points from April. The healthcare and social assistance; finance, insurance, real estate, rental, and leasing; business, building, and other support services; and accommodation and food services industries all added jobs. The construction, transportation and warehousing, and utilities sectors shed jobs.
• U.S. labor productivity rose 0.2 percent in the first quarter of 2024 as output jumped 0.9 percent and hours worked increased 0.6 percent. In other labor-related news: the number of people who applied for U.S. unemployment benefits for the first time stood at 229,000 during the week that ended June 1, a number that was down 8,000 from the week before. Averaged over the past four weeks, first-time claims rose to 222,250. In all, roughly 1.792 million people claimed jobless benefits during the week that ended May 25.
• In other economic news: the U.S. personal consumption expenditures index, the Federal Reserve’s preferred inflation gauge, increased 0.3 percent from April 2024 to May 2024 and 2.7 percent from May 2023 to May 2024; Canada’s producer price index increased 1.5 percent between March 2024 and April 2024 and 1.4 percent between April 2023 and April 2024; the Conference Board’s index of consumer confidence rose to 102.0 in May from 97.5 in April due to improved feelings about the present and future landscape; and U.S. construction spending fell 0.1 percent between March 2024 and April 2024, but was up 10 percent between April 2023 and April 2024.