Canada: International Merchandise Trade, May 2016

Canada’s exports fell 0.7% to $41.1 billion in May. Export volumes declined 2.3% and prices were up 1.6%. Imports decreased 0.8% to $44.4 billion, as volumes were down 0.9% and prices edged up 0.2%. As a result, Canada’s merchandise trade deficit with the world in May was virtually unchanged compared with April at $3.3 billion.

Energy products exports increase in May

Canada’s exports of energy products increased 7.1% to $5.3 billion in May. For the section as a whole, prices were up 9.7%, while volumes were down 2.3%. Exports of crude oil and crude bitumen were the principal contributor to the gain, up 10.5% to $3.8 billion, mostly on higher prices (+9.9%). Volumes also rose (+0.6%) despite the wildfires in northeastern Alberta. Preliminary evidence indicates that Canadian refinery activity declined in May, freeing up crude oil supply for export, while the remaining shortfall was largely met by a drawdown of Alberta inventories of crude oil. Finally, although crude oil and crude bitumen export volumes for May increased, export volumes for April and May were below recent levels.

Imports of energy products increased 18.2% to $2.1 billion in May, the third consecutive monthly gain. Volumes were up 12.1% and prices rose 5.5%. Widespread increases throughout the section were led by refined petroleum energy products, up 63.8% to $694 million.

Trade surplus with the US widens in May

Exports to the United States were up 3.6% to $32.1 billion and imports were down 1.1% to $29.3 billion. As a result, Canada’s trade surplus with the United States rebounded from a low of $1.3 billion in April to $2.8 billion in May.

Exports to countries other than the United States decreased 13.6% to $9.1 billion in May. There were lower exports to the United Kingdom (-$723 million), to countries other than Canada’s principal trading partners (-$164 million) and to China (-$160 million). Imports from countries other than the United States edged down 0.1% to $15.1 billion in May. Lower imports from Japan (-$196 million) and Peru (-$152 million) were partially offset by higher imports from the United Kingdom (+$164 million). Consequently, Canada’s trade deficit with countries other than the United States widened from $4.6 billion in April to a record $6.0 billion in May.

Metal and non-metallic mineral products lead the decline in exports

Total exports decreased 0.7% to $41.1 billion, as 8 of 11 sections declined in May. Lower exports of metal and non-metallic mineral products; industrial machinery, equipment and parts; and farm, fishing and intermediate food products were partially offset by higher exports of energy products. Exports excluding energy products fell 1.8%. Year over year, total exports were down 3.4%.

Exports of metal and non-metallic mineral products declined 5.4% to $4.5 billion in May. Unwrought precious metals and precious metal alloys decreased 21.0% to $1.5 billion on lower exports of unwrought gold to the United Kingdom. For the section as a whole, volumes were down 2.8% and prices fell 2.6%.

In May, exports of industrial machinery, equipment and parts declined 4.9% to $2.6 billion. Commercial and service industry machinery led the decrease, down 25.0% to $267 million. Overall, volumes were down 4.5% and prices fell 0.5%.

There were lower exports of farm, fishing and intermediate food products, down 4.2% to $2.5 billion in May. Volumes decreased 8.1%, while prices were up 4.3%. Wheat exports led the decline, falling 28.0% to $402 million on lower volumes.

Lower imports driven by aircraft and other transportation equipment and parts

Total imports fell 0.8% to $44.4 billion in May, despite gains in 6 of 11 sections. Lower imports of aircraft and other transportation equipment and parts; metal ores and non-metallic minerals; and metal and non-metallic mineral products were largely responsible for the decline. Partially offsetting these decreases were higher imports of energy products, and basic and industrial chemical, plastic and rubber products. Year over year, total imports were down 2.1%.

After reaching a record high in April, imports of aircraft and other transportation equipment and parts fell 23.5% to $1.8 billion in May. The main contributor to the decline was lower imports of aircraft, down by half to $511 million.

Imports of metal ores and non-metallic minerals decreased 24.2% to $732 million in May. Other metal ores and concentrates led the decline, down 29.3% to $465 million, mostly on lower imports from the Dominican Republic and Peru. Overall, volumes were down 14.6% and prices fell 11.3%.

In May, imports of metal and non-metallic mineral products declined 3.9% to $3.6 billion. Imports of unwrought precious metals and precious metal alloys were down 27.0% to $622 million. For the section as a whole, volumes were down 5.0%, while prices were up 1.1%.

Along with imports of energy products, imports of basic and industrial chemical, plastic and rubber products also partially offset these declines, gaining 4.8% to $3.6 billion in May. Lubricants and other petroleum refinery products led the increase, up 20.0% to $597 million. For the section as a whole, prices were up 6.9%, while volumes fell 2.0%.

Real trade balance shifts to a deficit in May

In real (or volume) terms, exports decreased 2.3% in May, led by energy products; farm, fishing and intermediate food products; and motor vehicles and parts. Import volumes were down 0.9%, as lower imports of aircraft and other transportation equipment and parts, and metal and non-metallic mineral products were partially offset by higher imports of energy products. Consequently, Canada’s trade balance in real terms went from a $213 million surplus in April to a $317 million deficit in May.

Revisions to April imports and exports

Revisions reflect initial estimates being updated or replaced with administrative and survey data as they became available and amendments made for late documentation of high-value transactions. Imports in April, originally reported as $44.7 billion in last month’s release, were revised to $44.8 billion with the current month release. Exports, originally reported as $41.8 billion in last month’s release, were revised to $41.5 billion.

StatsCanada

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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