Canada’s International Trade Deficit Widened In August – Exports Down 1.0% In Month

Canada's merchandise trade deficit totalled $3.4 billion in August, widening from a $3.0 billion deficit in July, according to Statistics Canada.

The growing deficit was driven by exports that decreased 1.0% to $43.6 billion — despite increases in six of 11 sections on lower volumes, while imports remained unchanged during August. Exports have now fallen 10.6% since the record high posted in May of this year. Volumes decreased 1.9% in August, while prices were up 1.0%.

“Consumer goods, basic and industrial chemical, plastic and rubber products, as well as metal ores and non-metallic minerals were responsible for the decline in export values,” said Statistics Canada in its report. “Exports, excluding energy products, were down 1.4%. Year-over-year, total exports edged down 0.2%.”

Exports of consumer goods were down 3.8% to $5.7 billion in August, the third consecutive monthly decline. Pharmaceutical and medicinal products (-8.6%) led the decrease, mainly on lower exports to Italy. Prepared and packaged seafood products also contributed to the decline, down 10.5%, following the close of the snow crab fishing season at the end of July. Overall, volumes fell 2.4% and prices were down 1.4%.

Exports of metal ores and non-metallic minerals, down 9.7% to $1.5 billion, also contributed to the decrease. Lower exports of radioactive ores and concentrates (-75.3%) were attributable to shutdowns at uranium refining facilities in August. Overall, prices were up 14.7% while volumes were down 21.2%.

Imports Unchanged In August

Following the largest decline since January 2009 in July, total imports were virtually unchanged in August. Notable offsetting movements were observed in motor vehicles and parts (+2.5%), metal ores and non-metallic minerals (+9.9%), consumer goods (-1.8%) and aircraft and other transportation equipment and parts (-10.2%). Year-over-year, total imports were up 3.0%.

Imports of motor vehicles and parts rose 2.5% in August to $9.3 billion. Following a 17.9% decrease over June and July, imports of motor vehicle engines and motor vehicle parts were up 5.3% in August. This year, planned summer closures in the automotive manufacturing industry were more concentrated in the month of July compared with previous years. Overall, volumes increased 2.1% and prices were up 0.4%.

Imports of consumer goods fell 1.8% to $10.1 billion in August, the fourth consecutive monthly decrease. Clothing, footwear and accessories (-5.9%) led the decline, mostly on lower clothing imports from Bangladesh. In the section as a whole, volumes were down 1.3% and prices decreased 0.4%.

Exports To The U.S. Down 1.8%

Exports to the United States were down 1.8% to $32.6 billion in August, notably on lower exports of unwrought gold. Imports from the United States rose 0.9% to $30.3 billion. As a result, Canada's trade surplus with the United States narrowed from $3.2 billion in July to $2.3 billion in August. The Canadian dollar gained 0.5 US cents relative to the American dollar from July to August.

Statistics Canada noted that imports from countries other than the United States decreased 1.6% to $16.7 billion in August. Lower imports from China (cellphones), Saudi Arabia (crude oil) and Norway (ships) were partially offset by higher imports from Mexico (motor vehicles and parts).

Exports to countries other than the United States rose 1.5% to $11.0 billion, as increased exports to the United Kingdom (unwrought gold) and Japan (coal and canola) were partially offset by lower exports to China (canola) and India (uranium). Consequently, Canada's trade deficit with countries other than the United States narrowed from $6.2 billion in July to $5.7 billion in August.