U.S. Trade Deficit Narrows While Canada Widens
- The U.S. trade deficit in goods and services for July 2019 decreased by 2.7 percent, to $54 billion. The drop was due to a decline in the goods deficit by $1.6 billion, to $73.7 billion, and a decrease in the services surplus of $0.1 billion, to $19.7 billion. July exports rose 0.5 percent from June while imports fell 0.1 percent. The deficit from January to July 2019 was 8.2 percent higher than the same period in 2018. According to Reuters, “The politically sensitive goods trade deficit with China increased 9.4 percent to $32.8 billion on an unadjusted basis, the highest since January, with imports jumping 6.4 percent. Exports to China fell 3.3 percent in July. Smoothing out seasonal fluctuations, the shortfall with China dropped 1.7 percent in July as both imports and exports dropped.”
- According to The Wall Street Journal, in July Canada recorded a larger-than-anticipated trade deficit fueled by a drop in crude-oil prices. Canada posted a merchandise trade deficit with the rest of the world of C$1.12 billion ($842 million). Analysts expected a C$200 million deficit. Canadian exports fell 0.9 percent in July, making it the first time exports fell in consecutive months since late last year. Imports rose 1.2 percent. Exports to the United States dropped 1.1 percent during the month.
- The United States added only 130,000 jobs during the month of August, the Department of Labor announced last week, while the nation’s unemployment rate held steady at 3.7 percent. The reading was below the 150,000 new jobs analysts had predicted. Manufacturers added 4,000 new positions during the month.
- The Associated Press reported that, according to U.S. Census Bureau data, Americans have slowed the pace at which they’re forming new companies. Specifically, between 2007 and the first half of 2019, applications to form businesses that would likely hire workers fell 16 percent. Applications are down 2.6 percent so far this year compared with the same period last year. This data is significant because smaller companies account for roughly 85 percent of all hiring in the United States.
- The Institute for Supply Management’s purchasing managers’ index (PMI) fell to 49.1 percent in August, the lowest reading in more than three years that shows the sector is contracting. According to CNBC, “The report raised fears of a recession and hit the stock market.” The IHS Markit PMIfor the United States also fell, dropping to its lowest level in more than a decade.
- The IHS Markit PMI for Canada fell to 49.1 in August from 50.2 in July. Production and the level of new orders both declined and business optimism eased to a three-and-a-half year low
- In other economic news: U.S. construction spending increased 0.1 percent from June 2019 to July 2019, but declined 2.7 percent between July 2018 and July 2019; productivity in the United States increased 2.3 percent in the second quarter of 2019; and new orders for manufactured goods increased in the United States by 1.4 percent between June 2019 and July 2019.