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Trade Surplus Narrows to $1.6 Billion in November

Canadian Economics

By: David Ristovski

  • Canada’s merchandise exports were down 0.6 per cent (month-over-month) in November. Meanwhile, imports rose by 1.9 per cent. As a result, Canada’s merchandise trade surplus narrowed from $3.2 billion in October to $1.6 billion in November.
  • Exports fell to $65.7 billion, following four consecutive monthly increases. Exports of metal and non-metallic mineral products decreased 6.5 per cent, behind lower exports of unwrought gold, silver, and platinum group metals. Exports of aircraft and other transportation and equipment and parts decreased by 16.8 per cent. These two product groups made up the bulk of the declines, as exports were otherwise up 1.0 per cent in November. Overall, gains were recorded in seven of eleven product sections. In volume terms, exports were down 0.1 per cent.
  • Imports rose to $64.1 billion for the month, with increases in eight of the eleven product groups. Notable gains were recorded in imports of energy products (up 11.6 per cent), and industrial machinery, equipment, and parts (up 4.9 per cent). Furthermore, imports of refined petroleum products rose 18.8 per cent on higher imports of motor gasoline and aviation fuel from the United States—which coincided with outages reported at Canadian refineries in the fall and significantly contributed to the growth in imports of energy products. In volume terms, imports were up 1.6 per cent.
  • Canadian exports to the U.S. rose 0.4 per cent, while imports from the United States were up by 1.7 per cent. As a result, the merchandise trade surplus with the United States narrowed from $12.1 billion in October to $11.7 billion in November.

Key Insights

Uncertainty looms over the global economy, which could impact Canadian trade in the short run. Canadian exports took a bite out of GDP growth last quarter and there are some external factors that could cause this weakness to carry over into the final quarter of 2023. China’s recovery has been weak, and its manufacturing activity declined for a third consecutive month in December. Further, the Red Sea attacks could affect global shipment times and costs, which adds to the uncertainty. Overall, the global outlook is full of uncertainty, and that uncertainty ultimately translates to Canadian trade.

A soft landing is expected for the United States economy, which is a positive sign for Canadian trade. The U.S. economy performed well in the third quarter of 2023, expanding by 5.2 per cent (annualized). While this level of growth isn’t sustainable, the U.S. economy continues to show signs of resilience. Our call is that the U.S. economy will avoid dipping into negative territory which, combined with a weaker Canadian dollar, is a positive sign for Canadian exporters.

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

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