Canada’s Trade Surplus to Trend Lower in Coming Months

(CEP News)

Economists say Canada’s trade surplus with the rest of the world is likely to shrink further from July’s $4.85 billion figure reported Thursday by Statistics Canada.

The July reading was well below the $5.6 billion consensus estimate of analysts and the previous month’s revised surplus of $5.6 billion, which was originally reported as $5.8 billion.

Exports were 2.2% higher than in the previous month at $44.3 billion on stronger volumes and increased prices. Meanwhile, imports rose 4.5% to $39.4 billion. Both figures represent records for a single month.

Canada’s trade surplus has remained above $4 billion for six consecutive months after falling to $2.1 billion in December 2007 and $2.5 billion in January 2008. The monthly surplus hit a record high of $8.6 billion in January 2001.

Energy exports slipped 1.5% in July to $12.8 billion, but were 76% higher on an annual basis. Exports of industrial goods and materials rose 5% month-over-month and 10.6% on an annual basis to $10.1 billion. Exports of automotive products were up 2.4% from June but down 17% on an annual basis at $5.4 billion.

BMO deputy chief economist Doug Porter said the August swoon in commodity prices will see the merchandise trade surplus narrow more sharply in the months ahead, “probably to below the $3 billion mark in short order.”

The surplus on energy imports and exports dipped to $7.2 billion from the record high of $7.5 billion in the two prior months, Porter said, while the trade deficit on auto products hit a record high of $1.6 billion. “As recently as the start of 2007, Canada was still running a trade surplus on autos,” he said. Read the complete article.