Canada’s Trade Surplus Better Than Expected

(Globe & Mail)

Canada’s international trade surplus narrowed in October to $3.78-billion, the smallest since January, Statistics Canada said Thursday, as Canadians imported more than they exported.

That’s slightly higher than the $3.3-billion surplus expected by economists, but down from the revised September surplus of $4.25-billion. It’s the second straight month of decline for the trade surplus.

“The Canadian trade surplus narrowed as expected, but it was not as bad as feared,” said Charmaine Buskas, senior economics strategist at TD Securities. “There was still a heatlhy underlying tone in exporting activity.”

Both imports and exports rose in October, but the numbers were distorted by the biggest monthly depreciation ever in the Canadian dollar, Statscan pointed out. Imports, in particular, were inflated by a sliding loonie.

“The immediate effect of the currency depreciation on imports was to increase substantially the price of imported goods from the United States,” Statscan explained.

Imports from the United States surpassed exports by about $900-million, leading to the fourth straight month of declining trade surpluses with the United States, the agency said.

Overall, imports rose 4.1 per cent to $39.7-billion, with increases seen in all sectors except for automobiles. Imports of energy were especially strong.

Exports rose 2.5 per cent to $43.5-billion, mainly because of strong sales of machinery and equipment.

But once prices are factored out of the equation, both imports and exports fell in constant dollar terms – terms that reflect the actual volume of trade. Import volumes dropped 3.6 per cent, while export volumes fell 1.6 per cent.

While Canada’s trade surplus with the United States shrank, its position with the rest of the world improved slightly. The trade deficit with the rest of the world narrowed to $3.5-billion, due mainly to an increase in exports of petroleum and coal products, as well as sales of precious metals to the European Union.