Merchandise Exports Increase in August
October 4, 2019
Focus Area — Canadian Economics
The Conference Board of Canada’s Senior Economist Doris Chu offers the following insights on the merchandise trade data for August:
Following two months of decline, Canada’s merchandise exports increased in August. Despite the positive performance, the near-term outlook for the trade sector is expected to be less-than-stellar given all the turbulence and continued uncertainty on the global front. Growth prospects for Canada’s trade sector are expected to be tepid for the remainder of the year as exporters will undoubtedly feel the repercussions of slower US GDP growth.
- Boosted by higher energy products and aircraft, Canadian merchandise exports rose by 1.8 per cent in August. The monthly increase would have been stronger had it not been for lower exports of motor vehicles and parts.
- Merchandise imports were also up in August, increasing by 1.0 per cent. Higher imports of gold assets, energy products and metal and non-metallic minerals offset lower imports of consumer goods.
- With exports rising more than imports, Canada's merchandise trade deficit narrowed from $1.4 billion in July to $955 million in August.
- Driven by higher exports of business jets, exports to the United States increased by 3.1 per cent in August. At the same, led by higher imports of crude oil, imports from the U.S. were up 1.8 per cent. As a result, Canada’s trade surplus with the United States widened from $4.4 billion in July to $4.9 million August.
- Canada’s trade deficit with countries other than the United States increased from $5.7 billion in July to $5.9 billion in August. Exports declined by 1.9 per cent as a result of lower exports of gold to Hong Kong and crude oil to Italy, while imports from countries other than the United States contracted by 0.5 per cent due to lower imports of light-duty trucks from Mexico, ships from Norway, and pharmaceutical products from Switzerland.
- Although the bounce back in exports in August was encouraging, escalating turbulence on the global front is expected to adversely disrupt Canadian trade flows for the remainder of the year. The China-U.S. trade war has already taken a toll on U.S. real GDP growth. With the U.S. accounting for the bulk of Canada’s exports, slower U.S. GDP growth will undoubtedly limit growth prospects for Canada’s export sector moving forward.