Trade Surplus Widens for a Second Consecutive Month, Reaching $2.0 Billion

Canadian Economics

  • Canada’s merchandise exports rose by 2.7 per cent (month-on-month) in September. Meanwhile, imports increased by 1.0 per cent. Canada’s merchandise trade surplus widened, moving from $949 million in August to $2.0 billion in September.
  • With the increase, total monthly exports reached $67.0 billion. Price increases made the dominant contribution to export gains–in real terms, exports edged up a more modest 0.4 per cent. Nominal increases were recorded in seven of the eleven product sections, with exports of energy products (up 10.6 per cent from August) contributing to most of the monthly gain. Meanwhile, after reaching a record high in August, exports of metal and non-metallic mineral products fell 10.7 per cent in September mainly due to a decline in exports of unwrought gold, silver, and platinum group metals.
  • Total imports hit $65.0 billion for the month. Imports of motor vehicles and parts rose 5.8 per cent mainly due to higher imports of passenger cars and light trucks. Partially offsetting the overall gain, imports of industrial machinery, equipment and parts fell 3.6 per cent.
  • Canadian U.S.-bound exports rose by 2.6 per cent, while imports from the United States increased by 1.7 per cent. As a result, the merchandise trade surplus with the United States widened for a third consecutive month, moving from $11.0 billion in August to $11.7 billion in September.

Key Insights

Exports are expected to outpace imports this year. Trade activity rebounded after the reopening of British Columbia marine ports. However, with the Canadian economy having reached a standstill, import growth will soften as elevated household debt levels and higher interest rates continue to chip away at domestic demand. At the same time, a depreciating Canadian dollar will also add downward pressure on imports. With exporters capitalizing on a weaker dollar and much-improved supply chain conditions, however, real export growth is expected to exceed real import growth this year.

Considerable uncertainty casts a shadow over the global economic outlook, potentially exerting a dampening effect on Canadian trade. Higher interest rates have permeated the global economy, resulting in weaker global demand. While the U.S. economy has, to date, largely resisted the impact of rising interest rates, concerns are arising about conditions in Europe and China, which could pose challenges for Canadian trade and economic growth. Moreover, China’s factory activity contracted in October, which could impact global trade activity. Furthermore, ongoing geopolitical tensions and conflicts add another layer of complexity and will continue to shape the global economic landscape.

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


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