Economic News: Canadian Economy Expands While U.S. Trade Deficit Improves
- The Canadian economy expanded 0.4 percent in February, a significant improvement over the 0.1 percent contraction in January. Reuters reportersgoods-producing industries expanded 1.2 percent “as the mining and oil and gas extraction sector recovered from unscheduled maintenance shutdowns at some oil sands facilities” while services-producing industries expanded 0.1 percent.
- The U.S. trade deficit fell to $49 billion in March 2018, down from $57.7 billion the month before. The March reduction in the overall deficit reflected a $7.5 billion drop in the goods deficit and a $1.3 billion increase in the services surplus. The overall deficit was $25.5 billion, or 18.5 percent higher, than it was in March 2017.
- Driven by a surge in auto imports, Canada’s trade deficit rose to a record level in March 2018. The gap increased to C$4.14 billion in March from $2.93 billion the month before. Imports increased six percent in the month while exports rose just 3.7 percent.
- New orders for manufactured goods in the United States rose 1.6 percent in March from February while shipments increased 0.4 percent. The value of unfilled orders rose 0.8 percent and the unfilled orders-to-shipments ratio was 6.52, up from 6.51 in February. Inventories increased 0.3 percent and the inventories-to-shipments ratio was 1.35, unchanged from February.
- The labor market in the United States continues to tighten. The economy added 164,000 jobs in April and the nation’s unemployment rate fell to 3.9 percent from four percent the previous month. The nation’s manufacturers added 24,000 jobs in March and added 245,000 between March 2017 and March 2018. In other employment news: the number of individuals who filed for federal unemployment benefits for the first time increased to 211,000 for the week that ended April 28, up from 209,000 the week before. The four-week moving average of first-time claims fell, however, and was at its lowest level since March 1973. The number of individuals who continued to file for benefits fell to 1.756 million for the week that ended April 21, down from 1.833 million the week before. That figure was at its lowest level since December 1973. The four-week moving average of continuing claims also fell and also was at its lowest level since December 1973.
- Manufacturers also reported a tight labor market in the Institute for Supply Management’s purchasing managers’ index (PMI). The PMI fell to 57.3 in April from 59.3 in March due to declines in the readings for new orders, production, and employment. Meanwhile, the IHS/Market reading for the United States rose to 56.5, its highest level since September 2014, from 55.6. According to Markit, output strengthened at its quickest pace since January 2017. According to the Federal Reserve Bank of Dallas’ monthly reading, manufacturing conditions in the state of Texas also improved.
- The IHS/Markit PMI for Canada fell slightly, to 55.5 in April from 55.7 in March even though output and employment each improved.
- In other economic news: U.S. productivity increased 0.7 percent in the first quarter of 2018; personal incomes in the United States increased 0.3 percent from February 2018 to March 2018; U.S. construction spending fell 1.7 percent from February 2018 to March 2018, but was up 3.6 percent between March 2017 and March 2018; the number of new auto sold in the United States increased to 17.15 million units in April 2018, up from 17.04 million units in April 2017.