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February 8, 2016

This Week’s Top Economic Data Points: U.S. Deficit With China At Record-High In 2015

  • The U.S. trade deficit increased to $43.4 billion in December 2015 from $42.2 billion in November 2015. The goods deficit rose $1.3 billion to $62.5 billion while the services surplus increased by $0.1 billion. The overall trade deficit increased 4.6 percent in 2015 (exports were down 4.8 percent while imports were down by just 3.1 percent) with the U.S. trade deficit with China setting a record in 2015 and accounting for 60 percent of the overall U.S. global deficit. (The value of U.S. manufactured imports from China were 5.8 percent higher than U.S. exports to China.) Ernest Preeg from the Manufacturers Alliance for Productivity and Innovation noted U.S. exports of manufactures fell $40 billion, three percent, in 2015 while imports rose $49 billion and the trade deficit surged $89 billion, or 16 percent. According to the Coalition for a Prosperous America, those figures equated to a trade-related loss of 620,000 American manufacturing jobs, up from a 400,000-job loss in 2014.
  • The Canadian trade deficit dropped to $585 million in December, down from $1.6 billion in November, and the smallest gap recorded since July. (Analysts had predicted a deficit of $2.2 billion for December.) Driven by a 4.6 percent increase in auto exports, a 6.4 percent jump in consumer goods exports and a 7.2 percent rise in industrial equipment and parts exports, overall exports increased 3.9 percent at the end of 2015. Imports to Canada rose 1.3 percent in December.
  • New orders for manufactured goods in the United States fell 2.9 percent in December 2015 while shipment fell 1.4 percent. The number of unfilled orders also dropped, declining 0.5 percent, while inventories rose 0.2 percent. 
  • The Institute for Supply Management purchasing managers index (PMI) for the United States increased to 48.2 in January from 48.0 in February as new orders and production readings strengthened. Eight industries, including machinery and electrical equipment, expanded in January while ten, including fabricated metal products and primary metals, contracted. The Markit PMI for the United States also strengthened in January, rising to 52.4 from 51.2 as output and new orders expanded at faster rates.
  • The Royal Bank of Canada’s PMI increased to 49.3 in January from 47.5 in December. RBC Chief Economist Craig Wright said, “While Canadian business conditions continued to deteriorate in January, we saw signs of stabilization in the manufacturing industry supported by strong export sales alongside a pick up in the US economy and a weakening Canadian dollar. Ontario manufacturing continues to be the bright spot, while the sharp drop in performance in Alberta and B.C. suggests that heightened economic uncertainty and ongoing declines in capital spending are weighing on the economy.”
  • According to the Department of Labor, the U.S. economy added 151,000 jobs in January while the nation’s unemployment rate fell to 4.9 percent in January from five percent in December. Manufacturers added 29,000 jobs last month. The DOL also announced last week that 285,000 individuals filed for federal unemployment benefits for the first time during the week that ended Jan. 30, up from 277,000 the week before. The four-week moving average of first-time claims also rose, but the number of individuals who continued to file for benefits fell. That figure dropped to 2.255 million for the week that ended Jan. 23 from 2.273 million the week before. In other employment-related news: U.S. productivity fell at a three percent annualized rate in the final quarter of 2015 while personal incomes rose 0.3 percent in December.
  • The Canadian economy lost a net 5,700 jobs in January while the nation’s jobless rate increased to 7.2 percent from 7.1 percent in December. The manufacturing sector was hit hard last month, shedding 11,000 jobs. The agricultural industry lost 13,700 jobs while services sectors added 19,700.  
  • In other economic news: auto sales in Canada picked up in January; U.S. construction spending rose 0.1 percent between November 2015 and December 2015 and was up 8.2 percent between December 2014 and December 2015.