U.S. And Canadian Economies Both Shrink

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

• The U.S. economy contracted at a 0.3 percent annualized rate in the first quarter of 2025. The poor ready was attributed mostly to an increase in imports and drop in government spending. Meanwhile, the Conference Board Leading Economic Index® (LEI) for the United States, a key gauge of future growth, declined 0.7 percent in March and 1.2 percent in the six-month period ending in March 2025. A spokesperson for the Conference Board said March’s decline was driven by uncertainty surrounding tariffs, a declining stock market, and a drop in new manufacturing orders. Read the full report at this link.
• Canada’s gross domestic product contracted by 0.2 percent in February on a monthly basis for the first time since November 2024 as activities across mining, oil and gas, and construction sectors shrunk.
• New orders for U.S. manufactured goods rose 4.3 percent in March while shipments decreased 0.1 percent. Unfilled orders increased two percent. The unfilled orders-to-shipments ratio was 6.98, up from 6.81 in February. Inventories were up 0.1 percent while the inventories-to-shipments ratio was 1.45, unchanged from February. Read the full report at this link.
• The Institute for Supply Management’s purchasing managers’ index (PMI) fell to 48.7 from 49 in March. The employment reading inched up to 46.5 from 44.7 while the production index fell 4.3 points. Read the full report at this link. Meanwhile, the S&P Global Canada manufacturing purchasing managers index fell to 45.3 in April, the lowest level recorded since May 2020. Read that full report at this link.
• Regional manufacturing readings continue to paint the picture of a struggling sector. The Federal Reserve Bank of Kansas City’s manufacturing index fell to -4 in April from -2 in March. The nondurable manufacturing sector drove the declines, particularly the food and print manufacturing subsectors. The production index fell to -5 from +1 while the new orders reading was mostly unchanged and the capital expenditures index fell into negative territory after increasing slightly last month. Additionally, the future composite index fell from +10 to +6 as expectations for production, shipments, and new orders all declined. Read the full report at this link. According to the Federal Reserve Bank of Richmond, manufacturing activity also was softer in the mid-Atlantic region. Its composite manufacturing index fell to -13 in April from -4 in March. Of its three component indexes, shipments and new orders fell to -17 and -15, respectively, and employment fell to -5 from -1. Additionally, the local business conditions index dropped from -13 in March to -21 and the future indexes for shipments and new orders were down considerably. Read the full report at this link. One bright spot: Texas factory activity continued to rise in April. The Federal Reserve Bank of Dallas’s production index was largely unchanged at +5.1, a reading indicative of modest growth. Unfortunately, the bank’s new orders index fell 20 points to -20.0 while shipments index dropped into negative territory for the first time this year, falling to -5.5 from 6.1. Read the full report at this link.
• U.S. employers added 177,000 jobs in April while the nation’s unemployment rate remained steady at 4.2 percent. Overall, manufacturers reduced employment by 1,000 positions. Nondurable goods manufacturers shed 3,000 jobs, but durable goods manufacturers added 2,000. The average workweek in manufacturing fell by 0.2 hour to 40.0 hours while average hourly manufacturing earnings also came down, landing at $35.06 after coming in at $35.17 in March. In other employment news: there were 7.2 million jobs open in March, including 449,00 in the manufacturing sector.
• The number of people who applied for U.S. unemployment benefits for the first time ever was 241,000 during the week that ended April 26, a number that was up by 18,000 from the week before. Averaged over the past four weeks, the number of first-time claims rose to 226,000, an increase of 5,500 from the previous week’s average. In all, nearly 1.916 million people claimed federal unemployment benefits during the week that ended April 19. That figure was up by 83,000 from the week before and is at its highest level since November 2021.
• In other economic news: U.S. construction spending fell 0.5 percent between February 2025 and March 2025, but was up 2.8 percent from March 2024 to March 2025; retail sales in Canada fell 0.4 percent in February due mainly to decreases in sales from motor vehicle and parts dealers; sales of new homes in the United States increased 7.5 percent from February to March and six percent year-over-year; sales of existing homes in the United States fell 5.9 percent between February and March and 2.4 percent year-over-year; the University of Michigan’s index of U.S. consumer sentiment fell from 57.0 in March to 52.2 in April; and the Conference Board’s index of consumer confidence fell 7.9 points in April to 86.0.