U.S. Trade Gap Widens While Canada’s Closes
- The U.S. trade deficit increased to $50.1 billion in July from $45.7 billion in June. The increase reflected a rise in the goods deficit of $4.2 billion to $73.1 billion and a decrease in the services surplus of $0.1 billion. The goods and services deficit rose seven percent between July 2017 and July 2018. The U.S. trade deficit in goods with China totaled $36.8 billion in July 2018, its highest monthly level on record and an increase of 9.6 percent compared to July 2017. Through the first seven months of the year, the U.S.-China goods deficit increased 8.7 percent year over year to $222.6 billion and is on track to exceed the annual record of $375.6 billion set in 2017.
- According to The Wall Street Journal, Canada’s trade deficit with the world fell to C$114 million in July from C$743 million in June, the lowest level seen since December 2016. Exports rose 0.8 percent for the month and imports fell 0.4 percent. Canada’s trade surplus with the United States grew to C$5.35 billion, its highest level in nearly a decade. Canadian exports to the United States increased 3.3 percent from June 2018 to July 2018 and 16 percent from July 2017 to July 2018. Steel imports from the United States dropped 40 percent in July.
- The U.S. employment market remains strong. The American economy added 201,000 jobs in August and the nation’s unemployment rate held steady at 3.9 percent. Manufacturers shed 3,000 jobs last month. In other employment news, the U.S. Labor Department also announced 203,000 individuals filed for federal unemployment benefits during the week that ended Sept. 1, down from 213,000 the week before, and the lowest level seen since December 1969. The four-week moving average of first-time claims also declined and also is at its lowest level since December 1969. The number of individuals who continued to receive benefits fell to 1.707 million for the week that ended Aug. 25 from 1.710 million the week before. The four-week moving average of continuing claims dropped to 1.718 million, its lowest level since December 1973.
- New orders for manufactured goods in the United States fell 0.8 percent in July while shipments were virtually unchanged from the previous month. The value of unfilled orders also held steady at about $1.16 trillion and unfilled orders-to-shipments ratio increased to 6.73 from 6.64 in June. The value of inventories rose 0.8 percent and the inventories-to-shipments ratio was 1.35, up from 1.34 in June.
- The Institute for Supply Management purchasing managers’ index (PMI) hit 61.3 percent in August, an increase of 3.2 percentage points from July. Readings for new orders, production, and employment all improved last month. The IHS Markit PMI for the United States fell, however, declining to 54.7 in August from 55.3 in July.
- The IHS Markit PMI for Canada dropped to 56.8 in August from 56.9 in July, signaling the weakest overall improvement in business conditions since May. The report said slower new business growth was the main factor weighing on the headline index in August.
- In other economic news: U.S. labor productivity increased 2.9 percent during the second quarter of 2018 as output increased 5.0 percent and hours worked increased 2.0 percent; construction spending in the United States increased 0.1 percent between June 2018 and July 2018 and 5.8 percent between July 2017 and July 2018; and vehicle sales across the automakers in the United States posted a slight year-on-year in August.