U.S. Trade Surplus, Canadian Trade Deficit Fall

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

• A decline in imported goods resulted in the U.S. trade deficit shrinking by two percent to $63.2 billion in November. The unexpected narrowing was driven by an increase in services exports and a slight decline in merchandise imports. The November data puts the United States on track for the smallest trade deficit in three years after record deficits in 2021 and 2022.
• Canada’s merchandise trade surplus fell to $1.6 billion in November 2023 from $3.2 billion in October 2023 as imports rose and exports fell. Total imports rose 1.9 percent. That increase was attributed to an 11.6 percent increase in imports of energy products. Total exports fell 0.6 percent as exports of metal and non-metallic mineral products fell 6.5 percent, due mainly to lower exports of unwrought gold, silver, and platinum group metals. Exports of aircraft and other transportation equipment and parts also fell, however, dropping 16.8 percent.
• S. wholesale inventories fell in November for a second straight month, declining 0.2 percent after falling 0.3 percent in October. Inventories were down three percent from November 2022 to November 2023. The month-to-month drop was driven by a 1.1 percent decline in motor vehicle inventories, but metals, lumber, computer and electrical equipment, and grocery inventories also were down. Read the full report here.
• The National Association of Manufacturing’s fourth quarter 2023 Manufacturers’ Outlook Survey revealed optimism levels among small manufacturers remain historically low. In particular, the survey highlighted concerns about the rising tax burden, workforce difficulties, and a challenging business and economic environment.
• There were mixed messages last week regarding U.S. inflation. Wholesale inflation fell for the third consecutive month in December, declining 0.1 percent from the month before and rising only one percent from December 2022 to December 2023. U.S. consumer prices increased, however, rising 0.3 percent between November and December and 3.4 percent year-over-year. That number was up from a 3.1 percent year-over-year increase seen between November 2022 and November 2023. Still, for 2023 as a whole, consumer prices dropped by nearly half.
• S. initial unemployment claims dropped slightly to 202,000 during the week that ended January 6, 2024, the lowest level since mid-October. Over the past month, the average number of weekly initial claims fell by 250 to 207,750. According to figures from the week of December 30, 2023, roughly 1.83 million people are collecting jobless benefits, down 34,000 from a week earlier. Read more here.
• In other economic news: In the United States, real average hourly earnings for all employees increased 0.2 percent from November 2023 to December 2023 and 0.8 percent year-over-year.