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Merchandise Trade Continues to Disappoint

Dec 06, 2018

The Conference Board of Canada’s Senior Economist Doris Chu offers the following insights on the merchandise trade data for October.


Merchandise trade numbers continue to underwhelm as both exports and imports declined in October. However, solid fundamentals such as a stronger U.S. outlook, a low competitive Canadian dollar, and a preliminary trade pact between Canada, the United States, and Mexico are expected to support stronger export activity over the near term.
—Doris Chu, Senior Economist, The Conference Board of Canada.


  • With exports falling more than imports, Canada's merchandise trade deficit widened to $1.2 billion in October, up from $891 million in September.
  • Pulled down by lower exports of crude oil, Canadian merchandise exports declined by 1.2 per cent in October. Excluding energy products, exports were up 1.6 per cent.
  • With fewer imports of motor vehicles, merchandise imports fell 0.6 per cent.
  • Canadian exports to the U.S. continued to decline as a share of total exports reflecting a trend towards diversification. Exports to the U.S. declined by 2.3 per cent in October. With imports from the U.S. rising by 1.3 per cent, Canada’s trade surplus with the U.S. shrank from $4.3 billion in September to $3.1 billion in October.
  • On the other hand, higher exports of gold to Hong Kong and canola to Japan allowed Canada’s trade deficit with the rest of the world to narrow from $5.2 billion in September to $4.2 billion in October, the lowest deficit recorded since December 2016.
  • Although nominal export values declined, this was entirely driven by falling export prices. Export volumes increased by 1.2 per cent in October. Total export prices were down 2.3 per cent, the result of a 15.4 per cent drop in crude oil export prices. Import volumes were flat for the month.
  • The United States-Mexico-Canada Agreement (USMCA) was signed at the end of November, and although it still needs to be ratified by all three countries (and it will likely face some opposition from the new Democratic-led U.S. Congress), the preliminary trade pact still alleviates some of the uncertainty from the outlook for trade. 
  • The more stable outlook for trade will allow the Bank of Canada more leeway to continue removing monetary stimulus from the economy over the near term with two interest rate hikes expected in 2019.

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