U.S., Canadian Trade Deficits Expand

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

• The U.S. trade deficit expanded to $84.4 billion in September from $70.8 billion in August. Exports fell $3.2 billion to $267.9 billion while imports rose $10.3 billion to $352.3 billion. The September rise in the overall deficit reflected an increase in the goods deficit of $14.2 billion to $109 billion and an increase in the services surplus of $0.6 billion to $24.6 billion.
• Canada posted a higher than expected trade deficit of C$1.26 billion in September due to a drop in shipments from the country. Most of the decline in exports was due to lower prices of crude oil and other commodities, which cumulatively fell by 1.5 percent. In volume terms, exports increased 1.4 percent. Read more at this link.
• The U.S. economy grew at an annualized rate of 2.8 percent in the third quarter, driven in part by consumer spending. The expansion was slightly below the three percent growth rate recorded in the second quarter. Personal consumption expenditures rose 3.7 percent, while federal spending expanded 9.7 percent.
• Canada’s gross domestic product was essentially flat in August. The services-producing industries expanded only 0.1 percent while goods-producing industries fell 0.4 percent, hitting a low not seen since December 2021. The manufacturing and utilities sectors were mostly responsible for the decline.
• New orders for U.S. manufactured goods fell 0.5 percent in September while shipments declined 0.4 percent. Unfilled orders were up 0.2 percent and the unfilled orders-to-shipments ratio was 6.94, up from 6.86 in August. Inventories fell 0.2 percent and the inventories-to-shipments ratio was 1.46, unchanged from August.
• U.S. wholesale inventories reached $674.8 billion in September, a 0.3 percent increase from August. Inventory levels stood at $903.7 billion, down 0.2 percent from August, but 0.3 percent higher than in September 2023. The inventories-to-sales ratio rose to 1.34 from 1.33 a year earlier.
• The Institute for Supply Management’s (ISM) purchasing managers’ index (PMI) for the United States fell to 46.5 in October, its lowest point so far this year and the 23rd time it has signaled contraction in the past two years. Readings for employment and new orders improved, but production declined. Read more at this link.
• The S&P Global Canada Manufacturing Purchasing Managers’ Index (PMI) rose to 51.1 in October from 50.4 in September, its highest level since February 2023, and the first time the reading has been above the 50-point mark that indicates expansion in 17 months. Both output and employment improved. Read more at this link.
• The National Association of Manufacturers third quarter 2024 Manufacturers’ Outlook Survey revealed rising manufacturer uncertainty about the trajectory of the U.S. economy. Specifically, 68.4 percent of manufacturers cited the economy as their top concern. Manufacturers also are worried about expiring tax cuts, rising health care costs, and a generally unfavorable business environment. Read more at this link.
• Regional manufacturing readings still were in negative territory in October. The Federal Reserve Bank of Dallas’s manufacturing index rose to -3 in October from -9 in September. The new orders index remained in negative territory at -3.7 while the capacity utilization index rose to +4.3 and the shipments index reached +1.5. The employment index fell to -5.1, however. Read the full report at this link. Meanwhile, the Federal Reserve Bank of Richmond’s manufacturing index rose to -14 in October from -21 in September. The readings for shipments, employment, and new orders all improved. Read more at this link. Manufacturing activity in the Federal Reserve Bank of Kansas City’s region also remained in contraction territory last month though the bank’s composite index did improve to -4 from -8 in September. Several of the component indexes also strengthened even though they, too, remained in negative territory. Read more at this link.
• The U.S. economy added just 12,000 jobs in October while the country’s unemployment rate remained relatively steady at 4.1 percent. Manufacturers cut 46,000 jobs last month. Meanwhile, the number of people who applied for U.S. unemployment benefits for the first time stood at 221,000 during the week that ended Nov. 2, a figure that was up by 3,000 from the week before. Averaged over the past four weeks, first-time claims fell to 236,500. In all, nearly 1.892 million people claimed jobless benefits during the week that ended Oct. 26, a number that was up by 39,000 from the week before and is now at its highest level since November 2021. In other employment news: there were 7.44 million unfilled jobs in the United States in September, including 481,000 jobs in the manufacturing sector alone. Read more at this link.
• In other economic news: the University of Michigan consumer sentiment index rose to 70.5 in October, its highest level in five months; U.S. personal incomes increased 0.3 percent in September while the personal consumption expenditure index, the Federal Reserve’s favored method of gauging inflation, rose 0.2 percent — the largest amount since this past April; and new home sales in the United States rose 4.1 percent between August 2024 and September 2024 and 6.3 percent between September 2023 and September 2024; and U.S. construction spending increased 0.1 percent between August and September and 4.6 percent year-over-year.