U.S. Trade Deficit Widens While Canada’s Improves

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

• The U.S. economy added 147,000 jobs in June and the country’s unemployment rate held steady at 4.1 percent. Employment levels were relatively unchanged in several industries, including manufacturing. Read the full report at this link.
• The U.S. trade deficit was $71.5 billion in May, up $11.3 billion in April. May exports were $279 billion, $11.6 billion less than April exports, while imports for the month were $350.5 billion, $300 million less than April imports. The May increase in the goods and services deficit reflected a rise in the goods deficit of $11.2 billion to $97.5 billion and a decrease in the services surplus of $1million to $26 billion. Year-to-date, the goods and services deficit was up $175 billion, or 50.4 percent, from the same period in 2024.
• According to Statistics Canada, the country’s merchandise exports increased 1.1 percent in May while imports fell 1.6 percent. As a result, Canada’s merchandise trade deficit with the world narrowed from a record $7.6 billion in April to $5.9 billion in May. Exports of metal and non-metallic mineral products posted the largest increase, mainly on higher exports of unwrought gold. Imports of metal and non-metallic mineral products, which fell 16.8 percent, decreased the most in May, in large part due to lower imports of unwrought gold, silver, and platinum group metals.
• New orders for U.S. manufactured goods rose 8.2 percent to $642 billion in May. Shipments increased 0.1 percent to $599.4 billion, and unfilled orders jumped 3.4 percent to $1.455 trillion. The unfilled orders-to-shipments ratio was 6.98, up from 6.77 in April. Inventories rose 0.1 percent to $944.1 billion while the inventories-to-shipments ratio was 1.58, unchanged from April.
• The Institute for Supply Management’s manufacturing purchasing managers’ index (PMI) for the United States increased to 49.0 percent in June from 48.5 percent in May. The new orders index contracted for the fifth month in a row and the employment index fell 1.8 percentage points, but the production index was 4.9 percentage points higher than May’s figure of 45.4. Read the full report at this link. Meanwhile, the S&P Global manufacturing for the United States rose to 52.9 in June, up from 52.0 in May and its highest level since May 2022. U.S. manufacturers recorded the first rise in production for four months, and international sales also strengthened. Read the full report at this link.
• The S&P Global Canada manufacturing PMI was 45.6 in June, a number that was down from 46.1 in May. It was the fifth successive survey period in which the PMI has posted below the critical 50.0 mark that indicates contraction in the sector. International sales, especially from the United States, were especially weak. Read the full report at this link.
• The Federal Reserve Bank of Dallas’ manufacturing index for the state of Texas was largely unchanged in June. The bank’s production index held steady at 1.3, but other measures of manufacturing activity remained in contractionary territory. Specifically, the new orders index stayed negative even though it edged up to -7.3 from -8.7 and the shipments index fell eight points to -7.3. The employment index did improve, moving up two points to 5.7.
• The number of people who applied for U.S. unemployment benefits for the first time ever was 233,000 during the week that ended June 28. That number was down by 4,000 from the week before. Averaged over the past four weeks, the number of first-time claims was 241,500, a decrease of 3,750 from the previous week. In all, nearly 1.964 million people claimed federal unemployment benefits during the week that ended June 21. That figure was unchanged from the week before.
• In other economic news: U.S. construction spending fell 0.3 percent between April 2025 and May 2025 and 3.5 percent between May 2024 and May 2025; the U.S. personal consumption expenditures index, the Federal Reserve’s preferred measure of inflation, increased 0.1 percent from April to May and 2.3 percent year-over-year; and there were 7.8 million jobs open in the United States at the end of May 2025.