U.S. Trade Deficit Expands While Canadian Trade Surplus Hits Highest Level In Four Years

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

• The U.S. trade deficit jumped from $54.6 billion in April 2026 to $77.6 billion in May 2026, a 42.2 percent increase. The overall rise reflected a $23.6 billion jump in the goods deficit and a $600 million increase in the services surplus. The total goods and services deficit was down $203.9 billion, or 40.6 percent, from the same period in 2025, however. Read the full report at this link.
• Canada’s trade surplus increased to C$4.2 billion in May, up from C$3.4 billion the previous month, to hit its highest level in four years. Exports expanded 0.9 percent to a record C$77 billion in May, and were up 22 percent in the last four months. Shipments of unwrought aluminum and its alloys, which rose 51 percent, were one of the biggest contributors to the higher deficit. Read the full report at this link.
• The Canadian economy added 18,000 jobs in June while the unemployment rate declined 0.1 percentage points to 6.5 percent. The largest employment increase came from the accommodation and food services industry, which added 15,000 jobs. The manufacturing sector led the declines, shedding 17,000 jobs.
• U.S. industrial production ticked up 0.1 percent in June and grew at an annual rate of four percent in the second quarter. Manufacturing output was unchanged in June, but expanded at an annual rate of 4.7 percent in the second quarter. The indexes for mining and for utilities each grew 0.4 percent in June. At 102.6 percent of its 2017 average, total industrial in June was 1.1 percent above its level from one year ago. Capacity utilization was unchanged at 76.1 percent, a rate that is 3.3 percentage points below its long-run average.
• The combined value of U.S. distributive trade sales and manufacturers’ shipments rose 2.1 percent from April 2026 to May 2026 and 11.9 percent from May 2025 to May 2026. Inventories were up 0.3 percent for the month and 3.1 percent year-over-year. The total business inventories-to-sales ratio was 1.28, down from 1.39 one year ago. Read the full report.
• Total manufacturing sales in Canada reached a record high in May as they rose 1.3 percent from April to C$78.1 billion. For the month, sales improved in 14 of the 21 subsectors, led by the transportation equipment (up 4.1 percent) and chemical (up 4.6 percent) subsectors. The electrical equipment, appliance, and component subsector posted the largest decline. Sales fell by 5.8 percent. From May 2025 to May 2026, total manufacturing sales increased 13.4 percent.
• Regional manufacturing readings for July have been positive so far. The manufacturing industry in the New York region improved in July. The Federal Reserve Bank of New York’s general business conditions index rose 10 points to +15.6. New orders and shipments increased strongly. Unfilled orders increased while employment rose at a solid clip. Additionally, firms remained fairly optimistic that conditions would improve in the months ahead. Read the full report. According to the Federal Reserve Bank of Philadelphia, the manufacturing industry in its region continued to expand in July. The survey’s indicators for general activity and new orders both rose to nearly five-year highs and the shipments index also improved. The employment index was positive for a second consecutive month and firms continue to expect overall growth over the next six months. Read the full report.
• Sales from U.S. merchant wholesalers rose 3.4 percent from April 2026 to May 2026 and 18.1 percent between May 2025 and May 2026. Total inventories were up 0.1 percent for the month and four percent year-over-year. The May inventories-to-sales ratio for merchant wholesalers was 1.15, down from 1.31 in May 2025.
• During the week that ended July 11, 208,000 U.S. residents filed for federal unemployment benefits for the first time, a number that down up by 8,000 from the previous week. The four-week moving average of first-time claims was 214,250, a decline of 4,750 from the previous week. The number of people who continued to receive jobless benefits rose to 1.805 million for the week that ended July 4, 2026. That number was down by 16,000 from the week before. The four-week moving average of continuing claims, meanwhile, rose to 1.811 million, an increase of 1,250 from the week before.
• In other economic news: the number of new homes under construction in the United States increased 19 percent from May 2026 to June 2026 and 3.5 percent from June 2025 to July 2025; sales of existing homes in the United States fell 2.4 percent for the month, but increased 2.8 percent year-over-year; the U.S. producer price index fell 0.3 percent from May to June, but was up 5.5 percent year-over-year; and the U.S. consumer price index fell 0.4 percent between May and June, but was up 3.5 percent year-over-year.