Canadian Trade Deficit Narrows After Exports Rise

Canada’s merchandise trade deficit was narrower than economists forecast in November with shipments of automobiles and metals leading the first export gain in four months.

The deficit of $1.99-billion followed an October shortfall that was pared to $2.49-billion from the initial reading of $2.76-billion, Statistics Canada said Wednesday in Ottawa. Economists surveyed by Bloomberg forecast a November deficit of $2.6-billion, based on the median of 15 estimates.

Exports climbed 0.4 per cent to $43.3-billion following three prior declines. Sales of motor vehicles and parts rose 5.9 per cent to $7.94-billion, followed by a 20.4 per cent jump in metals ores and non-metallic minerals to $1.77-billion, and a 5.5 per cent gain in forestry products and packaging materials to $3.45-billion.

The gains in non-energy exports are what Bank of Canada Governor Stephen Poloz is counting on to drive a recovery and fulfill his prediction the economy will return to full output by mid-2017. Falling energy sales and investment led him to cut interest rates twice last year, and crude prices now at about $36 are pressuring him to act again.

The November report does little to undo what was a year of woe for Canada’s exporters. The deficit for January to November of $22.8-billion shatters the previous comparable record of $12.9-billion set in 2012.

The main culprit has been a drop in prices for exported energy. Energy shipments fell 6.6 per cent in November to $5.92-billion, capping a slide of 40.4 per cent over the prior 12 months.

via Globe and Mail

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza