The Conference Board of Canada’s Senior Economist Doris Chu offers the following insights on the merchandise trade data for October:
Canada’s trade performance turned a small corner in October as both export and imports registered modest increases. While the October’s trade numbers were encouraging, ongoing tensions and uncertainty on the global front are expected to continue to weigh on world economic activity over the near term and will serve to contain growth prospects for Canadian exports for the remainder of the year.
- After plummeting in September, merchandise exports bounced back with 0.8 per cent growth in October. The increase was largely owing to higher exports of energy, gold and miscellaneous consumer goods. The monthly increase would have been stronger had it not been for lower exports of agriculture products, which declined by 12.6 per cent, due in large part to lower shipments of soybeans to China.
- Merchandise imports also increased in October, rising by 0.5 per cent. Energy products led the way with imports of crude oil climbing for the eighth consecutive month. Lower imports of motor vehicles and parts provided some offset as labor troubles disrupted activity at several North American assembly plants in October.
- With exports outpacing imports by a small margin, Canada’s merchandise trade deficit inched down from $1.2 billion in September to $1.1 million in October.
- Exports to the United States rose by 1.0 per cent in October, while imports decreased by 1.7 per cent. As a result, Canada’s trade surplus with the United States widened from $4.6 billion in September to $5.5 million October.
- Muted export growth was largely responsible for Canada’s trade deficit with countries other than the United States widening from $5.8 billion in September to $6.6 billion in October. Higher exports of nickel to Norway, copper to India, gold to Hong Kong and wheat to Peru were completely offset by lower exports of soybeans and canola to China.
- Meanwhile, imports from countries other than the United States increased by 4.4 per cent due in large part to higher imports of pharmaceutical products from Belgium and Switzerland, and light trucks from Mexico.
- Export volumes were up 0.7 per cent for the month, while import volumes increased by a near-equivalent 0.8 per cent. Hence, real net exports will neither add or subtract from real GDP growth in October.
- Despite today’s positive report, the near-term outlook for Canada’s trade sector is expected to remain underwhelming. Vulnerable to the ongoing conflict and uncertainty on the global trade front, growth prospects for Canada’s export sector are expected to be limited for the rest of the year.