BC's export recovery continued in June as export sales posted a fourth increase in five months. International exports jumped more than 5% from May and 23% from a year ago in June to a seasonally adjusted $3.25 billion. This was the highest monthly sales figure since the mid-2000s with growth primarily reflecting stronger physical shipments, rather than higher prices. The key monthly export drivers were energy, mining and various manufactured and consumer goods.
The second-quarter uptrend points to a sector finding its legs following a weak start to the year. After facing headwinds from a weak external economy in the first quarter and a trucking strike, exporters have benefited from a recovery in U.S. growth and a still-favourable exchange rate. June's pop in activity lifted year-to-date current-dollar sales growth to 10% through the first half of the year, with a gain of about 4% after adjusting for price changes.
First-half export growth has been driven primarily by U.S. and South Korean demand, while sector growth was led by strong gains in energy (10%), raw metals and minerals (28%) and forestry (6.7%). The latter two sectors reflected an increase in physical goods, but growth in energy exports was due to higher natural gas and electricity prices. Physical shipments of natural gas were up a modest 5% through the first half, but dollar-volume sales grew 68%. Meanwhile, electricity sales were up 32% in dollar terms, but physical flow was down 7%.
Coal has been a weak link for B.C.'s export economy this year as declining prices for the commodity pulled dollar-volume exports lower by 18% despite only a modest decline in physical shipments.
International trade is a modest driver for economic growth this year. June's export surge combined with an import decline to lower the international merchandise trade deficit. Through 2014's first six months, the trade deficit has narrowed relative to a year ago.
We expect trade to remain a key source of growth for B.C.'s economy. Global growth and a stronger U.S. economy will drive demand for B.C. goods. Despite recent fluctuations, the Canadian dollar will provide a competitive advantage for exporters and limit import growth. Broader real export growth, which includes shipments of goods and services to international and other provincial markets, is forecast to reach 4% this year.
