An increase in consumer goods exports helped Canada’s international merchandise trade deficit narrow by $1 billion in September, Statistics Canada announced November 4.
As imports fell 1.3% and exports grew 0.7%, the country’s trade deficit with the world dropped to $1.7 billion from $2.7 billion in August.
This was the first time in five months that imports decreased.
Imports from the United States fell 0.4% and exports to that country decreased 0.3%, leading to a slight widening of Canada’s trade surplus with the U.S. to $3.17 billion from $3.15 billion in August.
Imports from countries other than the U.S. fell 3.1% to $15.5 billion. The biggest drop was imports from the United Kingdom (down $430 million). Exports to countries other than the U.S. increased 4% to $10.6 billion, including increased exports to Turkey (up $151 million), Spain (up $126 million) and India (up $114 million). As a result, Canada’s trade deficit with countries other than the U.S. decreased from $5.8 billion to $4.9 billion in September.
Dina Ignjatovic, economist at TD Economics, said this latest data shows that net trade will provide a substantial contribution to Canadian economic growth in 2015’s third quarter, which is set to be around 2.5% on an annualized basis—in line with the Bank of Canada’s forecast.
“Looking ahead, September’s data sets up the fourth quarter for another solid trade performance,” Ignjatovic said. “The shift toward export-driven growth should continue, supported by healthy demand south of the border and a Canadian dollar hovering around the 75 U.S.-cent mark.
“With energy prices still in the doldrums, non-energy exports will lead the way, including exports of services which have been on the rise in recent years.”
The 4.6% increase in consumer goods exports was primarily related to increased international sales of pharmaceutical and medicinal products. While volumes of energy product exports fell, rising prices resulted in a 3.7% increase in the value of those exports in September. Metal and non-metallic mineral products (up 3.2%) also contributed to September’s increase in exports.
Exports of motor vehicles and parts fell 3.7% and car and truck exports dropped almost 5%.
The biggest driver behind the drop in imports in September was a 14.3% decline in metal and non-metallic product imports. As well, energy imports fell by 12.3% over the period.
