Canadian Trade Deficit Increases While U.S. Gap Narrows

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

• In October 2025, Canada’s merchandise imports increased 3.4 percent, while exports were up 2.1 percent. As a result, Canada’s merchandise trade balance with the world went from a small surplus of $243 million in September to a deficit of $583 million in October. It was the eighth deficit in nine months. Read the full report from Statistics Canada. The U.S. trade deficit, meanwhile, was $29.4 billion in October 2025, down $18.8 billion from $48.1 billion in September 2025. The decline was due to a $19.2 billion decrease in the goods deficit and a $400 million decrease in the services surplus. Between September 2024 and September 2025, the U.S. trade deficit increased $56 billion, or 7.7 percent.
• As The Wall Street Journal reported, “Canada’s economy is on track to shrink slightly in the final quarter of 2025.” Specifically, the country’s economy shrunk 0.3 percent, the largest decline since the end of 2022. Early reports for November 2025 indicate the economy bounced back somewhat that month, however, expanding 0.1 percent. Find additional data from Statistics Canada at this link. Meanwhile, the U.S. economy grew at a seasonally and inflation-adjusted annual rate of 4.3 percent in the third quarter, the fastest pace of growth in two years. The growth exceeded the prior quarter’s 3.8 expansion and was due mostly to strong consumer activity and higher exports. Read the full report at this link.
• The Canadian economy added 8,200 jobs in December while the country’s jobless rate rose 0.3 percentage points to 6.8 percent. The U.S. economy added 50,000 jobs the same month while its unemployment rate held steady at 4.4 percent. In other employment-related news: during the week that ended Jan. 3, 208,000 Americans filed for federal unemployment benefits for the first time, an increase of 8,000 from the previous week’s level. The four-week moving average of first-time claims was 211,750, a decline of 7,250 from the previous week. The number of people who continued to receive jobless benefits rose to 1.914 million for the week that ended Dec. 27, 2025. That number was down by 8,000 from the week before. Additionally, the four-week moving average of continuing claims fell to 1,892,750 million, up 21,000 from the week before. Additionally, U.S. worker productivity surged 4.9 percent in the third quarter of 2025, the fastest pace in two years.
• New orders for U.S. manufactured goods fell 1.3 percent in October while shipments expanded slightly, rising 0.1 percent to $607 billion. Unfilled orders were up 0.2 percent and the unfilled orders-to-shipments ratio was 6.92, down from 6.98 in September. Inventories were virtually unchanged, meanwhile, and the inventories-to-shipments ratio was 1.56, the same level seen in September. U.S. wholesale sales fell 0.4 percent from September 2025 to October 2025 due mostly to a 0.6 percent drop in durable goods sales. Wholesale inventories rose 0.2 percent and the inventory-to-sales ratio of 1.30, up from 1.29.
• The Institute for Supply Management’s purchasing managers index (PMI) fell to 47.9 in December from 48.2 in November. The December reading was the lowest of 2025. New orders contracted for a fourth straight month while the production reading was 0.4 percentage points lower than November’s figure of 51.4 percent. One bright spot: the employment index was 44.9, up 0.9 percentage points from November.
• According to the Federal Reserve Bank of Dallas, Texas manufacturing activity contracted in December. The production index fell 24 points to -3.2, indicating a slight decline in output, while other measures of manufacturing activity also fell. For example, the new orders index dropped 11 points to -6.4 and the capacity utilization index plunged 24 points to -4.5. The shipments index also declined, falling to -10.6, its lowest reading in 17 months. The Federal Reserve Bank of Richmond also reported weakness in its region of the country. The composite manufacturing index for the central Atlantic region rose to -7 in December from -15 in November, but remained below the zero mark that separates expansion from contraction. All three of the bank’s component indexes rose, but remained negative. The shipments index increased slightly to -11 from -14, new orders improved to -8 from -22, and the employment index rose to -1 from -7.