Trade Deficit Widens to $1.1 Billion in August

Canadian Economics

  • Canada’s merchandise exports were down 1.0 per cent (month-over-month) in August. Meanwhile, imports inched up 0.3 per cent. Consequently, Canada’s merchandise trade deficit widened from $287 million in July to $1.1 billion in August.
  • Exports fell to $64.3 billion in August. They were down in 6 of 11 categories with exports of energy products (-3.0 per cent) and forestry products and building and packaging materials (-5.5 per cent) contributing most to the decline. However, exports of motor vehicles and parts (+5.1 per cent) as well as exports of farm, fishing and intermediate food products (+4.0 per cent) partially offset the overall decline in total exports. In volume terms, total exports rose 0.1 per cent.
  • Imports edged up to $65.4 billion in August. Imports of motor vehicles and parts rose 2.4 per cent and contributed most to the monthly increase. Further, imports of industrial machinery, equipment and parts were up 3.8 per cent. Meanwhile, imports of consumer goods (-2.8 per cent) partially offset the monthly increase. Overall, declines were observed in 5 of 11 product sections. In volume terms, imports were up by 0.4 per cent in August.
  • Canadian exports to the U.S. were down 4.3 per cent. Meanwhile, imports from the United States rose 0.9 per cent. As a result, the merchandise trade surplus with the United States narrowed from $10.5 billion in July to $8.0 billion in August.

Insights

Exports of energy products posted sharper declines than all other product categories. Concerns over oil demand exerted downward pressure on crude oil prices. Therefore, the monthly decline in energy exports can mainly be attributed to lower prices of crude oil. Additionally, exports of forestry products and building and packaging materials fell to $3.8 billion in August—its lowest level since July 2023. Lower exports of pulp and paper to China and the United States were the biggest contributor to the decline. The rail transport stoppages could have also played a role since a large portion of these types of products are exported via rail.

On the imports side, motor vehicles and parts were the largest contributors to the overall monthly increase. After falling 17.6 per cent in July, imports of passenger cars and light trucks saw the largest increase of all product subcategories, rising by 5.6 per cent in August. This coincides with higher production of light trucks and sport utility vehicles in the United States. Furthermore, imports of industrial machinery, equipment and parts also saw an increase comparable to motor vehicles and parts. Import gains were observed in product subcategories such as logging, construction, mining, and oil and gas machinery and equipment. Despite the monthly increase in this product category, imports of industrial machinery equipment and parts were down 20.8 per cent year-over-year.

For a more detailed analysis of our trade outlook, check out our latest Canadian Five-Year Outlook.

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