OTTAWA – Weaker exports of cars and crude oil unexpectedly shifted Canada’s merchandise trade balance with the rest of the world from a surplus of $2.2 billion in July to a deficit of $610 million in August, Statistics Canada said Friday.
The federal agency — which also reduced July’s surplus from a previously reported $2.6 billion — says Canada’s merchandise imports rose 3.9 per cent in August while exports fell 2.5 per cent.
It says imports — led by metal and non-metallic mineral products as well as energy products — hit a record high $44.8 billion.
Exports, however, fell by $44.2 billion after nine of 11 sections declined. Fewer exports of cars and light trucks, as well as crude oil and crude bitumen, were responsible for much of the drop.
Imports from the United States rose 1.4 per cent to $29.7 billion, while exports fell 2.5 per cent to $33.3 billion, shrinking the trade surplus with that country to $3.5 billion in August from $4.8 billion in July.
Exports to other countries fell 2.5 per cent to $10.9 billion and imports rose 9.3 per cent to $15.1 billion, widening that trade deficit to $4.1 billion in August from $2.6 billion in July.
Export Development Canada chief economist Peter Hall says the August trade numbers were “a bit of a cold shower,” but the situation compared to a year ago remains positive.
“Even though we’ve taken a one-month hit here, it certainly is a pause in a very strong trend,” he said in an interview.
“So I look at the overall number and I think, ‘OK, a two-and-a-half per cent downward hit for this month is stiff, that’s a big drop.’ But I look at how we’ve been doing thus far in the year, compared to the same period last year, and a 10.5-per cent increase is very strong.”
However, BMO Capital Markets economist Robert Kavcic wrote that “there’s no sugar coating” the negative August numbers but added that seasonal distortions have resulted in wide month-month swings for Canada’s trade numbers.
“This clouds the net export picture for all of Q3 a bit after a very strong start to the quarter. Assuming a modest improvement in the real trade balance in September, trade could still add modestly to growth, but not nearly as much as previously thought,” Kavcic wrote.
He added that the “one scrap of good news” in the August report is that all 11 major export sectors showed higher volumes compared with a year earlier.