United States, Canada Both Are Running Trade Deficits

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

• The U.S. goods and services deficit was $140.5 billion in March, up $17.3 billion from February. March exports were $278.5 billion, $0.5 billion more than February exports. March imports were $419 billion, $17.8 billion more than in February. The jump in the overall trade deficit reflected an increase in the goods deficit of $16.5 billion to $163.5 billion and a slight decrease in the services surplus. Year-to-date, the overall deficit increased $189.6 billion, or 92.6 percent, from the same period in 2024. Exports were up $41.1 billion, or 5.2 percent. Imports rose $230.7 billion, or 23.3 percent.
• According to Statistics Canada, the country’s merchandise exports decreased 0.2 percent in March while imports fell 1.5 percent. As a result, Canada’s merchandise trade deficit with the world narrowed from C$1.4 billion in February to C$506 million in March. Read the full report at this link.
• U.S. labor productivity decreased 0.8 percent in the first quarter of 2025 due to a 0.3 percent drop in output and an 0.6 percent increase in hours worked. It was the country’s first productivity decline in three years. Unit labor costs in the nonfarm business sector increased 5.7 percent in the first quarter reflecting a 4.8 percent increase in hourly compensation and a 0.8 percent decrease in productivity.
• U.S. wholesale inventories increased 0.4 percent from February 2025 to March 2025 and 2.2 percent from March 2024 to March 2025. Wholesale sales grew 0.6 percent for the month and 6.1 percent year-over-year.
• The Canadian economy added just 7,400 jobs in April. The country’s manufacturing industry shed 31,000 positions, however, with the bulk of the impact in Ontario. The wholesale and retail trade sector also lost nearly 27,000 jobs. Canada’s unemployment rate increased to 6.9 percent from 6.7 percent the month before. Read the full report at this link.
• The number of people who applied for U.S. unemployment benefits for the first time ever was 228,000 during the week that ended May 3. That number was down by 13,000 from the week before. Averaged over the past four weeks, the number of first-time claims was 227,000, an increase of 1,000 from the previous week. In all, nearly 1.879 million people claimed federal unemployment benefits during the week that ended April 26. That figure was down by 29,000 from the week before.