The combination of falling energy exports and significant jumps in the imports of consumer goods pushed Canada to a record trade deficit in March.
Data released May 5 from Statistics Canada revealed the nation’s trade deficit reached $3 billion.
The March deficit was $2 billion greater than the shortfall expected by analysts, economist Nick Exarhos with CIBC Economics wrote in a note to investors.
“A record trade deficit will make some headlines, but that’ll be a rear-view look
at what the fall in oil prices — which hit their lows in March — had on Canadian trade.”
While overall exports in March edged up to $42.5 billion, exports of energy products still declined 8.9% to $6.9 billion.
“And the history also looks worse than previously thought,” Exarhos wrote.
Statistics Canada revised its original February trade deficit estimate from $984 million to $2.2 billion after more data become available for energy exports.
While exports of motor vehicles and parts managed to rise 11.7% to $6.6 billion in March, Western Canada was hit hard by declines in petroleum products (-29.7%) and natural gas (-16.2%).
“In contrast, imports came bounding out of the gates,” TD Economics senior economist Randall Bartlett wrote in a note to investors.
Goods arriving from abroad rose to $45.5 billion, led by a $900-million increase in Chinese imports.
Canadians had increased demand for clothing, footwear and accessories as imports of consumer goods went up 7.9% to $10 billion.
“Today's trade release provides a great deal of clarity on the role net exports are going to play in the first quarter of 2015. Indeed, the decline in export prices due to the lower energy prices and weaker loonie comes as little surprise,” Bartlett wrote.
“As a result, net exports are expected to contribute positively and significantly to real GDP (gross domestic product) growth in the first quarter of 2015, in the order of around 1 percentage point.”
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