August 5, 2019

U.S. Trade Deficit, Canadian Trade Surplus Narrow In June


  • According to the U.S. Department of Commerce, the goods and services trade deficit was $55.2 billion in June, down $0.2 billion from $55.3 billion in May. The U.S. goods trade deficit with China, meanwhile, widened slightly in June to a five-month high of $30.2 billion. For the first six months of 2019, the U.S. goods deficit with China was $179.8 billion, down from $200.4 billion in the same six months of 2018. U.S. exports to China are down 18.1 percent so far this year while imports are down 12.2 percent.
  • According to Reuters, the Canadian trade surplus shrunk in June, to C$136 million that month from C$556 million in May. It was the first back-to-back monthly trade surplus since the end of 2016. June’s decline was due to drops in exports of crude oil (down 8.6 percent) and exports of aircraft and other transportation equipment (down 25.1 percent). Exports to the United States fell 3.9 percent and, as a result, Canada’s trade surplus with the United States narrowed to C$5.7 billion in June from C$5.9 billion in May.
  • The Canadian economy expanded 0.2 percent in the month of May due to an improvement in output in the manufacturing, construction and transportation equipment sectors.
  • The Institute for Supply Management’s purchasing managers’ index (PMI) for the United States registered 51.2 percent, a decrease of 0.5 percentage points from the June reading of 51.7 percent. Production and employment decreased slightly, but the reading for new orders improved. The Royal Bank of Canada PMI, meanwhile, rose to 50.2 in July from 49.2 in June.
  • New orders for manufactured goods in the United States rose $3.1 billion, or 0.6 percent to $493.8 billion, in June. Shipments increased $1.9 billion, or 0.4 percent, to $506.2 billion. The value of unfilled orders fell $8 billion, or 0.7 percent while inventories increased $1.3 billion or 0.2 percent, to $695.6 billion.
  • The U.S. economy added 164,000 jobs in July, in line with expectations. The unemployment rate remained at 3.7 percent, the labor force participation rate was little changed at 63 percent, and average hourly earnings annual growth edged up to 3.2 percent. In other employment news: the U.S. Department of Labor announced last week that 215,000 individuals filed for federal unemployment benefits for the first time during the week that ended July 27. That figure was up from 208,000 the previous week. The four-week moving average of first-time claims fell, however, while the number of individuals who continued to receive benefits rose. That figure increased to 1.699 million for the week that ended July 20 from 1.677 million the week before. The four-week moving average of continuing claims also rose.
  • In other economic news: the University of Michigan consumer sentiment index improved to 98.4 in July from 98.2 in June; U.S. construction spending fell 1.3 percent between May 2019 and June 2019 and 2.1 percent between June 2018 and June 2019; and the Conference Board’s index of consumer confidence rose to 135.7 in July up from 124.3 in June.