Canada: International merchandise trade, May 2019

Canada’s merchandise trade balance with the world was in a surplus position in May for the second time since December 2016. The $762 million surplus in May followed a $1.1 billion deficit in April. Exports rose 4.6% in May, in part due to an increase in exports of motor vehicles. Imports were up 1.0%, mainly on higher imports of aircraft.

In real (or volume) terms, exports increased 4.0% and imports were up 1.2%.

Widespread increase in exports

Total exports rose 4.6% to a record $53.1 billion in May, with 9 of 11 product sections posting increases. Exports of motor vehicles and parts, aircraft and other transportation equipment and parts, and energy products contributed the most to the increase. Year over year, total exports were up 8.6%. In May, non-energy exports rose 4.5%.

Exports of motor vehicles and parts were up 12.4% in May to $8.4 billion. Exports of passenger cars and light trucks (+17.8%) contributed the most to the increase, mainly due to higher Canadian motor vehicle production. The increased production was partly due to the resumption of activities at some assembly plants following atypical shutdowns in April. Through the first five months of 2019, exports of passenger cars and light trucks were up 2.8% compared with the same period in 2018.

Exports of aircraft and other transportation equipment and parts (+33.0% to $2.9 billion) also contributed to the overall increase. Exports of boats and other transportation equipment almost quadrupled as a result of higher exports of other transportation equipment to Saudi Arabia. Exports of aircraft (+40.2%) also increased in May, primarily because of increased shipments of business jets and commercial aircraft, particularly to the United States.

Exports of energy products rose 5.0% in May to $10.8 billion. Exports of crude oil were up 2.8%, the fifth consecutive monthly gain, mainly on higher prices. After falling 16.5% in April, exports of refined petroleum products rose 20.4% in May, mainly due to higher exports of heavy fuel oil to the United States.

Higher imports of aircraft

Following a 1.2% decline in April, total imports rose 1.0% to $52.3 billion in May, with 6 of 11 product sections posting increases. Higher imports of aircraft, as well as motor vehicle engines and motor vehicle parts, contributed the most to the overall increase. Year over year, total imports were up 1.1%.

Imports of aircraft and other transportation equipment and parts rose 14.2% to $2.2 billion. After declining by more than $1 billion in March and April combined, imports of aircraft were up by $433 million in May, primarily due to increased shipments of airliners from the United States and Europe.

Imports of motor vehicles and parts increased 1.6% in May to $9.8 billion. As observed in exports of passenger cars and light trucks, imports of motor vehicle engines and motor vehicle parts (+9.2%) rose as a result of increased production in assembly plants.

Trade surplus with the United States at its highest level in more than a decade

Exports to the United States rose 3.7% to a record $39.3 billion in May. Imports from the United States declined 0.5% to $33.3 billion. As a result, Canada’s trade surplus with the United States widened from $4.4 billion in April to $5.9 billion in May, the largest surplus since October 2008. Comparing the average exchange rates of April and May, the Canadian dollar lost 0.4 US cents relative to the American dollar.

Exports to countries other than the United States rose 7.3% to a record $13.8 billion in May, partly due to an increase in exports to Saudi Arabia (other transportation equipment). Higher exports to Japan (copper, coal), South Korea (metal ores) and the Netherlands (energy products, iron ores) also contributed to the increase. A significant decline in exports to the United Kingdom (gold) partially offset these increases.

Imports from countries other than the United States rose 3.7% in May to $19.0 billion. Higher imports from Saudi Arabia (crude oil) and Norway (motor gasoline, crude oil) contributed the most to the overall increase.

As a result, Canada’s trade deficit with countries other than the United States narrowed from $5.5 billion in April to $5.2 billion in May.

Revisions to April 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 April, originally reported as $50.7 billion in the last release, were revised to $50.8 billion. April imports, originally reported as $51.7 billion in the last release, were revised to $51.8 billion in the current month’s 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