Canada: International Merchandise Trade, April 2017

Canada’s merchandise trade balance with the world narrowed to a $370 million deficit in April, from a revised $936 million deficit in March. Exports rose 1.8% to $47.7 billion, led by higher exports of passenger cars and light trucks. Imports were up 0.6% to $48.1 billion, on the strength of import prices.

Canada’s trade activity has been strong in recent months, with Canada’s total merchandise trade (exports plus imports) reaching a record high $95.7 billion in April. Year over year, Canada’s total trade rose 10.9%.

Record high exports led by passenger cars and light trucks

Following a 3.2% increase in March, total exports rose 1.8% to a record high $47.7 billion in April, with advances in 8 of 11 sections. Volumes were up 1.1% and prices increased 0.7%. Motor vehicles and parts, energy products, and forestry products and building packaging materials drove the gain in exports for the month. Exports excluding energy products rose 1.7%. Year over year, total exports increased 14.7%.

Exports of motor vehicles and parts were up 4.4% in April to $8.1 billion. Passenger cars and light trucks led the increase, up 5.4% to $5.6 billion. This growth coincided with a third consecutive monthly increase in imports of motor vehicle engines and motor vehicle parts and a larger ramp-up in US auto inventories in April. For the section as a whole, volumes rose 2.8% and prices increased 1.6%.

Also contributing to the overall increase were higher exports of energy products, up 2.5% in April to $8.8 billion. Exports of natural gas led the increase, rising 18.5% to $1.1 billion, mostly on higher prices. Other energy products (+13.9%) also increased, mainly on higher exports of coal to the Netherlands. Coal exports have been strong in recent months as Australia’s coal industry continues to recover from Cyclone Debbie.

Exports of forestry products and building and packaging materials rose 4.7% in April to $3.7 billion. Following a 6.4% increase in March, lumber and other sawmill and millwork products rose 8.0% in April to $1.5 billion. Volumes for this group rose 4.3% and prices were up 3.6%. There were higher exports of softwood lumber to the United States in April. This increase preceded the decision by the US Department of Commerce to impose countervailing duties on imports of Canadian softwood lumber into the US, effective April 28.

Record high imports on higher prices

Total imports rose 0.6% to a record high $48.1 billion in April, a fifth consecutive monthly increase, with gains in 7 of 11 sections. Prices increased 1.0%, while volumes were down 0.3%. Year over year, total imports were up 7.4%.

Higher imports of consumer goods, electronic and electrical equipment and parts, and basic and industrial chemical, plastic and rubber products were responsible for the increase in April.

Meanwhile, imports of aircraft and other transportation equipment and parts were down 24.6% in April to $1.3 billion. Fewer imports of aircrafts from the United States and ships from the Netherlands and Poland led the decrease.

Imports of energy products (-14.0%) also decreased in April, to $2.3 billion, mainly on lower volumes. Crude oil and crude bitumen were responsible for the decline, down 22.9% to $1.3 billion, mainly on lower imports from Nigeria and Saudi Arabia.

Increased trade with the United States

Exports to the United States rose 5.4% to a record high $36.1 billion in April, mostly on passenger cars, natural gas and softwood lumber. Imports from the United States were up 1.1% to $31.1 billion.

As a result, Canada’s trade surplus with the United States widened from $3.4 billion in March to $5.0 billion in April, the largest surplus since May 2014. The Canadian dollar fell 0.3 cents US relative to the American dollar in April.

Exports to countries other than the United States declined 7.8% in April to $11.6 billion, partially offsetting the gain in exports to the United States. Lower exports to the United Kingdom (unwrought nickel and gold), China (unwrought gold), Spain (crude oil and iron ores) and Switzerland (unwrought gold) contributed most to the decline.

Imports from countries other than the United States edged down 0.2%, as widespread declines were partially offset by higher imports from Norway (crude oil and energy transmission cables) and Turkey (crude oil).

As a result, Canada’s trade deficit with countries other than the United States widened from $4.4 billion in March to $5.3 billion in April.

Real trade surplus widens in April

In real (or volume) terms, exports were up 1.1% and imports were down 0.3% in April. Consequently, Canada’s trade surplus in real terms widened from $239 million in March to $843 million in April.

Revisions to March imports and exports

Revisions reflected initial estimates being updated with or replaced by administrative and survey data as they became available, as well as amendments made for late documentation of high-value transactions. Exports in March, originally reported as $47.0 billion in last month’s release, were revised to $46.8 billion in the April release. Imports, originally reported as $47.1 billion in last month’s release, were revised to $47.8 billion in the April release.

StatsCanada

This article 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 Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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