Canadian international merchandise trade, September 2018

Canada’s merchandise trade deficit with the world narrowed to $416 million in September from $551 million in August. Imports fell 0.4%, while exports edged down 0.2%.

Owing to a large upward revision to imports for the August reference month, the trade balance originally reported as a $526 million trade surplus last month is now showing a $551 million deficit. Most of this revision was due to the import of three high value ships, which were reported after the publication of August data. Although late documentation of high-value transactions is common for trade data, the aggregate value these ships represent is infrequently received in late transactions.

Decrease in imports

Total imports fell 0.4% to $50.8 billion in September, despite gains in 6 of 11 product sections. Import volumes decreased 1.5%, while prices rose 1.1%. Aircraft and other transportation equipment and parts (mostly ships) and energy products contributed the most to the September decline. Year over year, total imports increased 8.5%.

In September, imports of aircraft and other transportation equipment and parts fell 28.3% due to a $598 million decrease in imports of ships. Three icebreakers were imported from Sweden at the end of August, followed by none in September. Excluding the imports of these ships in August, total imports would have risen 0.8% in September.

Imports of energy products fell 11.5% to $3.0 billion in September. Crude oil imports, down 13.2%, led the decline, mainly due to lower imports from Saudi Arabia and the United Kingdom. These decreases coincided with the beginning of maintenance work at certain Canadian refineries. Imports of refined petroleum energy products (-18.9%) also contributed to the decline, primarily on lower imports of motor gasoline from the Netherlands. For the section as a whole, volumes were down 13.4%, while prices rose 2.1%.

Consumer goods are behind lower exports

Exports edged down 0.2% in September to $50.4 billion, despite increases in 6 of 11 product sections. Export volumes fell 1.2%, while prices were up 1.1%. Lower exports of consumer goods were mostly offset by higher exports of energy products. Exports excluding energy products fell 0.8%, a second consecutive monthly decline. Year over year, total exports increased 15.7%.

Exports of consumer goods decreased 3.9% to $6.0 billion in September. Other food products (-10.7%) led the decline, mainly on lower exports of lentils and peas. In the past three years, India has been a major destination for lentil and pea exports, especially during the months of September and October. Recently, India has considerably reduced its imports of these products in favour of domestic production, contributing to the downward trend in exports of this product group.

Higher exports of energy products (+2.3%) partially offset the overall decrease in September. Refined petroleum energy products (+10.6%) were partly responsible for the increase, mostly on the strength of heavy fuel oil exports to the United States. Crude oil exports (+1.0%) also contributed to the gain, the seventh straight monthly increase. Higher prices (+5.6%) were behind the increase in crude oil exports in September, while volumes decreased 4.3%. The volume of crude oil exports has risen three times in the past seven months.

Decreased trade with countries other than the United States

Imports from countries other than the United States fell 3.3% to $17.7 billion in September, the fourth consecutive monthly decrease. Lower imports from Sweden led the decline, mainly on decreased imports of ships (icebreakers). Other countries also contributed to the decline, including Japan (gold, passenger cars and light trucks), Switzerland (copper) and Mexico (passenger cars and light trucks). Higher imports from China (various products) moderated the decrease in September.

Exports to countries other than the United States fell 1.8% to $12.5 billion in September. Many countries contributed to the decrease, including Hong Kong (gold), Italy (crude oil), India (copper ores and radioactive ores) and Spain (crude oil). These declines were partially offset by a sharp increase in exports to China (gold).

As a result, Canada’s trade deficit with countries other than the United States narrowed from $5.6 billion in August to $5.2 billion in September.

Imports from the United States rose 1.2% to $33.1 billion, partly on the strength of higher imports of gold. Exports were up 0.4% to $37.8 billion. As a result, Canada’s trade surplus with the United States narrowed from $5.0 billion in August to $4.8 billion in September. Canada’s combined trade surpluses with the United States over the past three months were the highest since 2008.

Exports increase in the third quarter

Following a 6.0% increase in the second quarter of 2018, exports rose 2.6% in the third quarter to $152.0 billion. Exports of energy products accounted for nearly two-thirds of the increase in the third quarter, mainly due to higher prices.

Imports edged down 0.1% in the third quarter to $153.0 billion. Lower imports of aircraft and other transportation equipment and parts, and motor vehicles and motor vehicle parts were partially offset by higher imports of electronic and electrical equipment and parts.

In real (or volume) terms, imports fell 1.2% in the third quarter, while exports edged down 0.3%.

Revisions to August exports and imports

Revisions reflect initial estimates being updated with or replaced by administrative and survey data as they become available, as well as amendments made for late documentation of high-value transactions. Exports in August, originally reported as $50.5 billion in last month’s release, were essentially unchanged in the current month’s release. August imports, originally reported as $50.0 billion in last month’s release, were revised to $51.0 billion.

StatsCanada

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.