U.S. Trade Deficit Expands While Canada Runs A Surplus

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

• The U.S. the goods and services deficit rose to $60.3 billion in March, up $2.5 billion from $57.8 billion in February. The increase reflected a jump in the goods deficit of $4.1 billion to $88.7 billion and an improvement in the services surplus of $1.6 billion. Year-to-date, the goods and services deficit was down $211.2 billion, or 55 percent, from the same period in 2025.
• Canada recorded its first trade surplus in six months in March due to spikes in energy prices and gold shipments. The country’s merchandise trade deficit totaled C$1.78 billion, an improvement from February’s C$5.11 billion deficit. Canada’s surplus with the United States widened for the first time since November 2025, while its deficit with all other trading partners was at its lowest level since the beginning of 2021. Exports were at their second-highest level ever, rising 8.5 percent from the month before to C$72.77 billion, while the value of imports fell 1.6 percent to C$70.99 billion.
• The U.S. economy expanded at an annual rate of two percent in the first quarter of 2026, up from a 0.5 percent growth rate in the last quarter of 2025. Investment, exports, consumer spending, and government spending all contributed to the improved reading. Imports, which are a subtraction in the calculation of gross domestic product, also increased.
• The Canadian economy expanded 0.2 percent in February. Goods-producing industries grew 0.4 percent in February, driven by expansions in manufacturing and mining, quarrying, and oil and gas extraction. Services-producing industries edged up 0.1 percent due to rebounds in transportation and warehousing and wholesale trade that were largely offset by contractions in the public sector.
• The Institute for Supply Management’s purchasing managers’ index (PMI) for the United States registered 52.7 percent in April, the same reading as March. Readings for new orders improved, but those for production and employment were down from the previous month.
• According to the S&P Global PMI for Canada, the country’s manufacturing economy registered a notable upturn in performance during April, with output and new orders rising at rates not seen since the first half of 2022. Employment and purchasing were also improved and firms signaled optimism about the future. Read the full report at this link.
• Regional manufacturing readings issued last week provided an inconsistent assessment of the national sector. According to the Federal Reserve Bank of Dallas, the outlook for Texas factory activity was mixed last month. The bank’s production index was largely unchanged at +5.1, but other measures of manufacturing activity signaled contraction. The new orders index plummeted 20 points to -20.0, for example, while the capacity utilization index fell to -3.8 and the shipments index dropped into negative territory for the first time this year, slipping to -5.5 from 6.1. Perceptions of broader business conditions continued to worsen notably in April. The general business activity index fell 20 points to -35.8, its lowest reading since May 2020. In contrast, the Federal Reserve Bank of Richmond’s composite manufacturing index inched up to +3 in April from zero in March. Two of its three component indexes rose: new orders to +8 from +4 and employment to zero from -2. The shipments index was unchanged at -2. Read the full report at this link.
• U.S. wholesale sales increased 2.8 percent between February 2026 and March 2026 and 10.9 percent between March 2025 and March 2026. Inventories were up 1.3 percent for the month and 2.9 percent year-over-year. The March inventories-to-sales ratio was 1.21, down from 1.30 a year before.
• U.S. nonfarm business sector labor productivity increased 0.8 percent in the first quarter of 2026. Output was up 1.5 percent and hours worked increased 0.7 percent. Read the full report at this link.
• There were other several pieces of U.S. employment-related news in the last two weeks. The economy added 115,000 jobs in April and the nation’s unemployment rate held steady at 4.3 percent. (Manufacturers shed 2,000 jobs in April.) During the week that ended May 2, 200,000 U.S. residents filed for federal unemployment benefits for the first time, a number that was up 10,000 from the previous week. The four-week moving average of first-time claims was 203,250, a decline of 4,500 from the previous week. The number of people who continued to receive jobless benefits rose to 1.766 million for the week that ended April 25, 2026. That number was down by 10,000 from the week before. The four-week moving average of continuing claims, meanwhile, fell to 1,789,750, a decrease of 5,250 from the week before. In other employment related news, the number of job openings in the United States was largely unchanged in March at 6.9 million. Job openings in the manufacturing industry rose in March, however, increasing to 462,000 from 443,000 in February.
• Employment in Canada was little changed in April. The economy shed 18,000 jobs while the country’s unemployment rate increased by 0.2 percentage points to 6.9 percent. Read the full report at this link.
• In other economic news: the U.S. personal consumption expenditures index increased 3.5 percent between March 2025 and March 2026; U.S. construction spending increased 0.6 percent between February 2026 and March 2026 and 1.6 percent between March 2025 and March 2026; the number of new homes under construction in the United States increased 10.8 percent between February and March and by the same amount year-over-year; and the Conference Board’s index of consumer confidence for the United States increased by 0.6 points to 92.8 in April, from 92.2 in March.