U.S. Trade Deficit Expands While Canada’s Merchandise Gap Narrows

Connecting the Dots monitors all major economic announcements in the United States and Canada, but the Metals Service Center Institute also offers industrial metals industry-specific data products that provide much deeper analysis and insight. Visit MSCI’s website and click on industry data to learn more about our Metals Activity Report (MAR), Momentum Monitors, and Macroeconomic Current.

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

• The U.S. goods and services trade deficit rose to $70.3 billion in December 2025, up $17.3 billion from in November. December exports were $5 billion less than November exports while imports jumped $12.3 billion month-to-month. The monthly increase in the overall deficit reflected a rise in the goods deficit of $15.7 billion and a decrease in the services surplus of $29 billion. For all of 2025, the goods and services deficit was down $2.1 billion, or 0.2 percent, from 2024.
• Canada’s merchandise exports increased 2.6 percent in December while imports rose 0.6 percent. As a result, Canada’s global merchandise trade deficit narrowed from $2.6 billion in November to $1.3 billion in December. Read the full report.
• U.S. gross domestic product at an annualized rate of 1.4 percent in the final quarter 2024, a number that was well below what economists expected and was down from the third quarter’s 4.4 percent growth rate. Growth was lower due in part to the more than four-week federal government shutdown late last year.
• The Federal Reserve reported U.S. industrial production increased 0.7 percent in January after rising 0.2 percent in December. Last month, manufacturing output advanced 0.6 percent, the index for mining fell 0.2 percent, and utilities output improved 2.1 percent. Capacity utilization increased to 76.2 percent, a rate that was 3.2 percentage points below its long-run average.
• According to Statistics Canada, manufacturing sales in the country increased 0.6 percent from November 2025 to December 2025 and 1.1 percent between December 2024 and December 2025. For the month, sales improved in 12 of 21 subsectors and were driven by a 12 percent increase in motor vehicle sales and a two percent increase in food product sales. These gains were partially offset by a 5.1 percent decline in petroleum and coal product sales.
• New orders for metalmaking machinery in the United States totaled $814.3 million in December 2025, the highest monthly value on record. December’s orders reflected an 86.7 percent increase from November 2025 and a 60 percent increase from December 2024. Read the full report from the Association for Manufacturing Technology at this link.
• Regional U.S. manufacturing readings released last week showed some strength. The Federal Reserve Bank of Philadelphia reported the index for current general activity in its region increased four points to +16.3 in February. The new orders index improved, but the shipments index fell nine points to +0.3 and the employment index dipped into negative territory for the first time since June, falling from 9.7 to -1.3. The Federal Reserve Bank of New York’s general business conditions index held steady at +7.1, meanwhile. The new orders index came in at +5.8 while the shipments index dropped 17 points to -1.0. The unfilled orders index rose 17 points to +9.1 and inventories also improved. Read the full report.
• The U.S. economy added 130,000 job in January, and the unemployment rate held relatively steady, landing at 4.3 percent. The manufacturing sector added 5,000 jobs. The healthcare, social assistance, and construction sector also added jobs while the financial services sector and the federal government shed them. Read the full report at this link. While the January jobs report was stronger than expected, the U.S. government also adjusted employment numbers downward for 2024 and 2025. For 2024, the United States added just 1.5 million jobs, down from the previously estimated two million jobs. In 2025, U.S. employers added just 181,000 new jobs versus the previously-estimated 584,000 new jobs.
• During the week that ended Feb. 14, 206,000 Americans filed for federal unemployment benefits for the first time, a 23,000 drop from the previous week’s level. The four-week moving average of first-time claims was 219,000, down 1,000 from the previous week. The number of people who continued to receive jobless benefits rose to 1.869 million for the week that ended Feb. 7, 2026. That number was up by 17,000 from the week before. The four-week moving average of continuing claims dropped to 1,845,250, an increase of 1,000 from the week before.
• The U.S. housing market has continued to show weakness. The number of new homes under construction rose 6.2 percent from November 2025 to December 2025, but was down 7.3 percent from December 2024 to December 2025. Additionally, according to the National Association of Realtors, existing home sales fell 8.4 percent between December 2025 to January 2026 and 4.4 percent between January 2025 and January 2026.
• U.S. import prices increased 0.1 percent from November 2025 to December 2025 and were unchanged year-over-year. U.S. export prices were up 0.3 percent for the month and 3.1 percent from December 2024 to December 2025.
• In other economic news: Canadian retail sales fell 0.4 percent in December due mostly to declines in sales from motor vehicle and parts dealers; the U.S. Consumer Price Index increased 0.2 percent between December 2025 and January 2025 and 2.4 percent between January 2025 and January 2026; Canada’s CPI was flat between December and January and rose 2.4 percent year-over-year; and U.S. real average hourly earnings jumped 0.5 percent between December and January and 1.2 percent year-over-year.