The Conference Board of Canada’s Senior Economist Doris Chu offers the following insights on the merchandise trade data for April:
“Following March’s upbeat performance, Canada’s merchandise trade sector continued to forge ahead in April. This month’s release provides encouraging signs that we will see better trade performance for the remainder of 2019. While ongoing global trade disputes and other challenges continue to limit the sector’s contribution to economic growth, the improving trend means Canada’s trade sector is not expected to be a drag on overall economic growth this year.”
- After expanding by 4.4 per cent in March, merchandise exports continued its upward trajectory in April, rising by 1.3 per cent. The monthly increase was led by higher exports of gold to Hong Kong and the United Kingdom, but partially offset by lower exports of motor vehicles and parts.
- On the other hand, merchandise imports declined by 1.4 per cent in April. Lower imports were recorded for several product categories, with aircraft and other transportation equipment registering the biggest decline.
- With exports increasing and imports declining, Canada's merchandise trade deficit narrowed from $2.3 billion in March to $966 million in April—the lowest deficit since October 2018.
- However, Canada’s trade surplus with the U.S. shrunk slightly from $4.5 billion in March to $4.2 billion in April as Canadian exports to the U.S increased by just 0.9 per cent while imports from the U.S. increased by 1.9 per cent.
- Exports to countries other than the United States performed better rising by 2.4 per cent in April. The increase in exports was largely owing to higher exports of gold to Hong Kong, copper to China, nickel to Norway and wheat to Indonesia.
- At the same time, imports from countries other than the United States declined by 7.0 per cent, led by lower imports of various products from China and crude oil from Saudi Arabia. As a result, Canada’s trade deficit with the rest of the world shrank from $6.8 billion in March to $5.2 billion in April.
- In terms of volumes, merchandise exports increased by 2.0 per cent in April, while imports contracted by 1.9 per cent. Accordingly, net trade will make a positive contribution to real GDP growth in April.
- While global discord on the trade front and other challenges will likely continue to undermine growth prospects over the course of the year, April’s trade numbers are encouraging and support our view that the trade sector will put forth a better performance for the remainder of 2019.
- In particular, solid U.S. economic demand, a competitive Canadian dollar and a bounce back in the energy sector in the second half of 2019, are all expected to boost the contribution to economic growth from the trade sector this year.
- Even still, a sluggish performance on the domestic side of the economy will keep overall growth in check.