United States, Canada Both Ran Trade Deficits In March

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

• The U.S. goods and services trade deficit was $69.4 billion in March, down $0.1 billion from $69.5 billion in February. The slight increase reflected a rise in the goods deficit of $800 million and an increase in the services surplus of $900 million. Year-to-date, the goods and services deficit is up 3.2 percent.
• Canada’s merchandise exports declined by 5.3 percent in March while imports fell 1.2 percent. As a result, Canada’s merchandise trade balance with the world went from a surplus of $476 million in February to a deficit of $2.3 billion in March, or, the largest trade deficit since June 2023.
• New orders for U.S. manufactured goods rose 1.6 percent in March while shipments increased 0.3 percent. The unfilled orders-to-shipments ratio was 7.19, up from 7.10 in February. Inventories were virtually unchanged at $857.7 billion, and the inventories-to-shipments ratio was 1.47, also unchanged from February.
• The Institute for Supply Management’s manufacturing purchasing managers’ index (PMI) fell to 49.2 percent in April, down from 50.3 percent in March. New orders returned to contraction territory after one month of expansion while production also fell. The employment index increased, however, rising to 48.6 percent from 47.4 percent in March. Read the full report here.
• Canada’s manufacturing sector is also struggling. The S&P Global Canada PMI fell to 49.4 in April from 49.8 in March. The reading has been below the 50 threshold that marks a shrinking of the industry for 12 months, marking the longest contraction stretch for the PMI since October 2010. New orders and production were both down and there were signs that inflation is picking up.
• According to the Federal Reserve Bank of Dallas, manufacturing activity in Texas contracted further in April. The bank’s general activity index fell to -14.5 from -14.4 in March. The production index rose from -4.1 to +4.8 while new orders improved slightly, but remained in negative territory. Read the full report here.
• U.S. labor productivity increased 0.3 percent between the last quarter of 2023 and the first quarter of 2024 due to output rising 1.3 percent and hours worked advancing one percent. Productivity was up 2.9 percent from the first quarter of 2023.
• The U.S. economy added 175,000 jobs in April, and the jobless rate held relatively steady at 3.9 percent. Manufacturers added 8,000 jobs. Read the full report here. In other jobs-related news: the number of U.S. job openings also held relatively steady at 8.5 million in March. While there was little change month-over-month, the number of job openings has fallen by 1.1 million since March 2023. There were 570,000 open positions in the U.S. manufacturing industry in March, down from an adjusted 587,000 in February.
• The number of people who applied for U.S. unemployment benefits for the first time stood at 208,000 during the week that ended April 27, a number that was the same as the week before. Averaged over the past four weeks, first-time claims fell slightly to 210,000. In all, roughly 1.774 million people claimed jobless benefits during the week that ended April 20.
• In other economic news: U.S. construction spending fell 0.2 percent between February 2024 and March 2024, but rose 9.6 percent between March 2023 and March 2024; U.S. civilian worker compensation costs increased 1.2 percent in the first quarter of 2024 due to the fact that salaries rose 1.1 percent and benefit costs were up 1.1 percent; and the Conference Board’s consumer confidence index fell for the third consecutive month in April, declining to 97.0 from 103.1 in March.