U.S. Trade Deficit Expanded To A Record High In 2024

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

• The U.S. goods and services trade deficit increased to $98.4 billion in December 2024, up $19.5 billion from November. The December increase in the goods and services deficit reflected an increase in the goods deficit of $18.9 billion to $123 billion and a decrease in the services surplus of $0.6 billion to $24.5 billion. For 2024, the goods and services deficit increased $133.5 billion, or 17 percent, from 2023, and was at a record high. Exports increased $119.8 billion or 3.9 percent. Imports increased $253.3 billion or 6.6 percent.
• According to Statistics Canada, in December the country’s merchandise exports increased 4.9 percent while imports expanded 2.3 percent. As a result, Canada’s merchandise trade balance with the world went from a deficit of C$986 million in November to a surplus of C$708 million in December. December’s surplus was the first merchandise trade surplus since February 2024.
• New orders for U.S. manufactured goods fell 0.9 percent in December while shipments increased 0.6 percent to $589.7 billion. Unfilled orders fell 0.5 percent and the unfilled orders-to-shipments ratio was 6.93, down from 7.06. The report also showed inventories increased 0.4 percent while the inventories-to-shipments ratio was 1.46, down from 1.47 in November. Read the full report at this link.
• The Institute for Supply Management’s purchasing managers’ index for January 2025 hit 50.9 percent, 1.7 percentage points higher than its December 2024 reading. The new orders index was in expansion territory for the third month after seven months of contraction, strengthening to a reading of 55.1 percent, three percentage points higher than the 52.1 percent recorded in December. Readings for production and employment also improved.
• Construction spending in the United States increased 0.5 percent from November 2024 to December 2024 to $2.18 trillion. Construction spending was up 4.3 percent from December 2023 to December 2024. Read the full report at this link.
• U.S. labor productivity increased 1.2 percent in the fourth quarter of 2024 due to a 2.3 percent rise in output and a one percent jump in hours worked. From the same quarter a year ago, nonfarm business sector labor productivity increased 1.6 percent in the fourth quarter of 2024. Unit labor costs in the nonfarm business sector increased three percent in the fourth quarter of 2024 and 2.7 percent over the last four quarters.
• The U.S. added 143,000 jobs in January, fewer than economists expected, but the nation’s unemployment rate fell to four percent last month from 4.1 percent in December 2024, beating forecasts and a level that was still near historic lows. The manufacturing sector added just 3,000 jobs from December to January. Read the full report at this link.In related news, there were 7.6 million jobs open in the U.S. economy in December 2024. Read that report at this link. Additionally, the number of people who applied for U.S. unemployment benefits or the first time ever was 219,000 during the week that ended Feb. 1, a number that was up by 11,000 from the week before. Averaged over the past four weeks, first-time claims increased to 216,750. In all, nearly 1.886 million people claimed unemployment benefits during the week that ended Jan. 25.
• According to Statistics Canada, employers in the country added 76,000 jobs in January and the unemployment rate fell 0.1 percentage points to 6.6 percent. Employment gains were led by the manufacturing industry, which added 33,000 jobs, and the professional, scientific, and technical services sector, which added 22,000 jobs.