Canada’s merchandise trade deficit with the world increased to $1.9 billion in February from $628 million the previous month, according to Statistics Canada data released April 5.
This deficit is about $1 billion wider than analysts expected, said CIBC Economics’ Nick Exarhos.
“After a string of stronger-than expected Canadian data releases, Canadian trade for February spoiled the party,” Exarhos said in a note to investors.
“After a strong January GDP print, we assumed some giveback in the coming months, and today’s data falls in line with that story.”
Exports fell 5.4% to $43.7 billion in the month. This comes after a record high the previous month. The drop consists of a 3.2% decrease in prices and a 2.2% decline in volumes. Imports fell 2.6% to $45.6 billion, with prices slipping 1.4% and volumes dipping 1.2%.
The country’s trade deficit with the United States alone narrowed in the month, however. Exports to the U.S. fell 5.6% to $33.1 billion while imports dropped 2.7% to $30.5 billion.
While a 14.4% drop in oil exports to $4.9 billion—which was the eighth consecutive monthly drop—contributed to the decline, this was not the only area with a decrease, and “areas of strength in prior reports also showed weakness,” Exarhos said.
Two of the other biggest declines were in consumer goods (down 14.3% to $6.2 billion) and motor vehicles and parts (down 4.4% to $8.7 billion).
Even after removing the energy-related sectors, there was a 4.5% decline in exports, which “suggests that the factory sector might be headed for a significant dip ahead,” Exarhos said.
“However, putting things into context, growth should still come in close to 3% in Q1, well above where expectations were set just a few months ago.”
The Canadian dollar, which had already fallen in the past couple days, dipped further on the day’s data release, reaching 75.86 cents U.S. as of press time.
@EmmaHampelBIV
