U.S. Trade Gap Improves, Canada’s Widens
- The U.S. trade deficit was $43.1 billion in May, down $3.0 billion from $46.1 billion in April. The improvement was due to a decrease in the goods deficit of $2.6 billion to $65.8 billion and an increase in the services surplus of $0.5 billion to $22.7 billion. Year-to-date, the goods and services deficit increased $17.9 billion, or 7.9 percent, from the same period in 2017. Exports increased $84.5 billion or 8.8 percent. Imports increased $102.4 billion or 8.6 percent.
- Canada’s trade deficit increased to $2.77 billion in May from $1.86 billion the month before. According to the CBC News, the gap increased due to “a sharp rise in imports of airliners and gasoline” and a decline in shipments of motor vehicles and parts. Exports of metal ores and non-metallic minerals also declined, dropping 14.6 percent to their lowest level since September 2016.
- New orders for manufactured goods in the United States increased 0.4 percent from April to May and shipments increased 0.6 percent. The number of unfilled orders rose 0.5 percent while the unfilled orders-to-shipments ratio was 6.68, down from 6.73 in April. Inventories rose 0.2 percent and the inventories-to-shipments ratio was 1.35, unchanged from April.
- The U.S. economy added 213,000 jobs in June as the nation’s unemployment rate increased to four percent from 3.8 percent in May. Manufacturers added 36,000 jobs in June. That figure included job gains in fabricated metal products (+7,000 jobs) and primary metals (+3,000 jobs). The U.S. Labor Department also announced last week that 231,000 individuals filed for federal unemployment benefits for the week that ended June 30, up from 228,000 the week before. The four-week moving average of first-time claims also increased, as did the number of individuals who continued to file for benefits. That figure rose to 1.739 million for the week that ended June 23 from 1.707 million the week before. The four-week moving average of continuing claims fell to its lowest level since December 1973.
- The IHS/Markit purchasing managers’ index (PMI) for the United States fell to 55.4 in June from 56.4 in May due to a slowdown in output and new orders while the Institute for Supply Management PMI increased to 60.2 last Monday from 58.7 in May. Readings for the primary metals and fabricated metals products industries both improved.
- The IHS/Markit PMI for Canada rose to 57.1 in June from 56.2 in May and is now at its highest level since October 2010. The report said strong improvements in new order books in recent months continued to place pressure on production capacity, which led to rising backlogs and greater staff recruitment in June. It also reported manufacturers indicated they were paying higher prices for steel and aluminum in June.
- Sales of automobiles in the United States increased 1.8 percent during the first half of 2018 from the same point last year. Sales in June 2018 were five percent higher than they were in June 2017. Analysts cautioned that sales could slow, however. According to The Associated Press, “Cox analysts also said rising interest rates and a possible trade war due to tariff threats from President Donald Trump could raise new-vehicle prices and payments and cut into auto sales in the second half.”
- U.S. construction spending increased 0.4 percent from April 2018 to May 2018 and 4.5 percent from May 2017 to May 2018.