Canadian International Merchandise Trade, May 2017

Canada’s merchandise trade deficit with the world reached $1.1 billion in May, up from a $552 million deficit in April. Imports rose 2.4% to $49.8 billion, led by an increase in aircraft imports. Exports were up 1.3% to $48.7 billion on account of higher unwrought gold exports.

Canada’s trade activity has been strong in recent months, with imports and exports both reaching record highs, resulting in a total trade value of $98.5 billion in May. This represents a 13.8% increase over the same month last year.

Imports rise for a sixth consecutive month

Total imports rose 2.4% in May to $49.8 billion, a sixth consecutive monthly increase. Volumes rose 1.8% while prices increased 0.6%. Higher imports of aircraft and other transportation equipment and parts, motor vehicles and parts, and energy products were responsible for the increase. Year over year, total imports were up 10.2%.

Imports of aircraft and other transportation equipment and parts (+45.9%) led the increase, primarily due to aircraft imports, which rose $527 million to $636 million in May. The import of five new airliners in May contributed the most to the growth.

Imports of motor vehicles and parts rose for a fifth consecutive month, up 3.7% to a record high $9.8 billion. Imports of motor vehicle engines and motor vehicle parts rose 4.4%, coinciding with stronger production and higher exports of motor vehicles in May. Following a 3.1% decline in April, imports of passenger cars and light trucks (+3.4%) rebounded in May.

Imports of energy products (+6.5% to $2.8 billion) also contributed to the overall gain in May. Refined petroleum energy products led the increase (+16.4%), as planned maintenance work at Canadian refineries resulted in increased demand for foreign refined petroleum products in May. Overall, volumes rose 18.8% while prices fell 10.4%.

Record exports led by unwrought gold

Total exports rose 1.3% to a record high $48.7 billion in May, a third consecutive monthly gain, on account of higher volumes. Metal and non-metallic mineral products and motor vehicles and parts were the largest contributors to the increase. Exports excluding energy products rose 3.6% in May. Year over year, total exports were up 17.8%.

Exports of metal and non-metallic mineral products increased 11.1% to a record high $6.2 billion in May. Unwrought precious metals and precious metal alloys (+$731 million) were responsible for the increase, mainly on stronger exports of unwrought gold to the United Kingdom. Most of these shipments were transfers of assets within the banking sector.

Exports of motor vehicles and parts rose 3.6% to $8.5 billion in May. Passenger cars and light trucks posted the largest increase, up 3.0% to $5.8 billion. This gain coincided with a fourth consecutive monthly increase in imports of motor vehicle engines and motor vehicle parts, and followed some downtime at assembly plants in April.

Exports of energy products fell 9.0% to $8.0 billion, largely offsetting the increases in May. Lower exports of crude oil and crude bitumen (-15.2%) were behind this decrease. This was an atypical decline for crude oil in May, a month that usually sees increases with the start of summer. Overall, prices decreased 8.2% and volumes fell 0.9%.

Record imports from the United States

Imports from the United States rose 3.6% to a record high $32.7 billion in May, on higher imports of aircraft and motor vehicles. Exports to the United States edged down 0.3% to $36.3 billion. As a result, Canada’s trade surplus with the United States narrowed from $4.8 billion in April to $3.5 billion in May. The Canadian dollar fell 0.9 cents US relative to the American dollar from April to May.

Exports to countries other than the United States were up 6.2%, mainly on higher exports of unwrought gold to the United Kingdom. Imports from countries other than the United States edged up 0.2%, as higher imports from Saudi Arabia (crude oil), China and Belgium were largely offset by lower imports from Germany (passenger cars).

As a result, Canada’s trade deficit with countries other than the United States narrowed from $5.3 billion in April to $4.6 billion in May.

Real trade surplus narrows in May

In real (or volume) terms, imports were up 1.8% and exports rose 1.1% in May. Consequently, Canada’s trade surplus in real terms narrowed from $814 million in April to $561 million in May.

Revisions to April export and import data

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 April, originally reported as $47.7 billion in last month’s release, were revised to $48.1 billion in the current month’s release. Imports, originally reported as $48.1 billion in last month’s release, were revised to $48.6 billion.

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