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Merchandise Trade Continues to Disappoint

Feb 06, 2018

The Conference Board of Canada’s Senior Economist Doris Chu and Matthew Stewart, Director of National Forecasting, offer the following insights on Statistics Canada's merchandise trade data release for December.


December’s merchandise trade numbers were largely disappointing, as the trade sector finished 2017 on a less-than-stellar note. While solid U.S. economic demand and a competitive Canadian dollar—trading in the 80-cent range—will boost greater export activity this year, the trade sector will continue to face some challenges in the near-term that will prevent net exports from being a major contributor to overall economic growth.
—Matthew Stewart, Director, National Forecast, The Conference Board of Canada.


  • Exports to the U.S. fell in December, underlining a trend of weak performance outside of the energy sector over the last year. Imports to the U.S. also contracted, leaving Canada’s trade surplus with the U.S. at $3.4 billion, up slightly from the previous month.
  • Ahead of a possible NAFTA collapse, Canada continues to diversify its trade. Exports to the rest of the world surged by 4.9 per cent. Yet, Canada’s deficit with the rest of the world widened to $6.6 billion, as an increase in exports was outpaced by a 6.8 per cent increase in imports.
  • Overall, real merchandise exports were flat in December. Energy exports managed a solid increase after pipeline disruptions affected shipments in November and exports of metal and non-metallic mineral products also saw a pickup in trade. However, these increases were offset by lower exports of consumer goods, industrial machinery and equipment, and motor vehicles and parts. With consumer spending easing, trade will need to make a larger contribution to economic growth. These numbers suggest that, for now, the trade sector is continuing to disappoint.
  • Yet, there is some good news on the imports side. Merchandise imports continued to climb in December driven partly by higher imports of industrial machinery and equipment, which signals continued improvement in business investment—something that is long overdue in Canada.
  • With imports outpacing exports for the second consecutive month, net exports are expected to be a drag on real GDP growth in the final quarter of the year.