U.S., Canadian Trade Deficits Both Shrank In Recent Readings

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

• The Canadian economy expanded 0.3 percent in the third quarter, after rising 0.5 percent in both the second and first quarters. The contributions to growth from higher household and government spending were moderated by slower non-farm inventory accumulation, lower business capital investment, and lower exports.
• The U.S. the goods and services deficit was $73.8 billion in October, down $10 billion from $83.8 billion in September. The decline reflected a decrease in the goods deficit of $10.4 billion and a drop in the services surplus of $400 million. Year-to-date, the goods and services deficit was up $80.7 billion, or 12.3 percent, from the same period in 2023.
• In October, Canada’s merchandise exports increased 1.1 percent due largely to the fact that imports expanded 0.5 percent. As a result, Canada’s merchandise trade deficit with the world narrowed from $1.3 billion in September to $924 million in October. Read the full report at this link.
• U.S. employers added 227,000 jobs in November as the nation’s unemployment rate held relatively steady at 4.2 percent. Manufacturers added a 22,000 jobs last month. The increase in manufacturing jobs all came from durable goods sectors and, more specifically, transportation equipment manufacturers, which accounted for nearly all of the gains.
• Canadian employers added 51,000 in November while the country’s unemployment rate rose 0.3 percentage points to 6.8 percent due to the fact that more people were looking for work. The news was not universally positive, however. Manufacturers in Canada shed 29,000 jobs last month.
• New orders for U.S. manufactured goods expanded 0.2 percent in October to $586.7 billion. Shipments fell 0.2 percent to $585.4 billion while unfilled orders rose 0.4 percent. The unfilled orders-to-shipments ratio was 7.03, up from 6.97 in September. Inventories fell 0.1 percent and the inventories-to-shipments ratio was 1.46, the same as September.
• According to two other reports, the U.S. manufacturing industry continues to struggle. The Institute for Supply Management’s manufacturing purchasing managers’ index (PMI) for the United States rose to 48.4 in November, up from 46.5 in October. New orders and production improved slightly, but the sub-50 reading marks the eighth consecutive month of conraction in the sector and the 24th negative reading in the past 25 months. The S&P PMI for the United States also improved slightly, but remained under the 50-point mark that separates contraction from expansion. Read that report at this link. Heading north of the U.S. border, the S&P PMI for Canada enjoyed a positive month in November, with output, new orders and employment all rising since October. Overall, the PMI improved to 52.0 in November from 51.1 in October.
• Regional U.S. manufacturing readings also were lackluster in November. The Federal Reserve Bank of Dallas reported that Texas factor activity was flat. The production index fell to a near-zero reading after rising to +14.6 in October. Other measures of manufacturing activity, including new orders, also were weaker. The Federal Reserve Bank of Richmond said activity in its region remained sluggish, with the composite manufacturing index unchanged at -14 from the previous month. The continued stagnation in that region was driven by a decline in shipments and new orders.
• U.S. construction spending increased 0.4 percent between September 2024 and October 2024 and five percent between October 2023 and October 2024. Read the full report at this link. Meanwhile, new home sales in the United States fell 17.3 percent between September and October and 9.4 percent year-over-year. Read that report at this link.
• In other economic news: the U.S. personal consumption expenditures price index, which is the Federal Reserve’s preferred measure of inflation, increased 0.2 percent from September to October 2024 and 2.3 percent year-over-year. Additionally, the Conference Board’s index of U.S. consumer confidence increased to 111.7 in November from 109.6 in October.