Canada in June had its largest trade deficit on record of $3.6 billion, up $100 million from May and marking a fifth straight month of declines.
“[Canada is] still searching for non-energy export growth,” said Brian DePratto, economist for TD bank in a note to investors. “While some of this can be put down to weak energy exports given disruptions in that sector, the more concerning trend is the ongoing weakness in non-commodity exports.”
Both imports and exports saw moderate increases in June, with imports slightly outpacing exports, contributing to the trade deficit. According to Nathan Janzen, senior economist at RBC, the moderate gain in the value of Canadian exports reflects a sharp rise in energy prices. Export volumes declined by 1.2%.
Canada’s trade surplus with the U.S. narrowed in June, falling 30% from $2.6 billion to $1.8 billion. The U.S. trade deficit rose 8% in June, from $41 billion to $44.5 billion.
Canada’s non-U.S. trade deficit shrank, falling by over 10% from $6.1 billion to $5.4 billion.
Canadian import and export growth was mixed across major sectors. Six of the 11 major import sectors showed declines, including building materials, which fell 1.7%. Vehicle parts and energy imports both posted increases.
Outbound goods also had mixed growth, with exports in electronic equipment and plastic products rising while motor vehicle exports fell.
According Janzen, part of the pullback can be explained by sluggish industrial production south of the border and a stronger U.S. economy.
“Q2 is looking quite soft on the back of these numbers,” said economists for Scotiabank, in a note to investors.
