Trade numbers came in better than expected in May, according to figures released this morning by Statistics Canada.
The May merchandise trade deficit shrank to $0.3 billion from an upward revised April deficit of $1 billion (originally reported as $0.6B).
Expectations going into the report were for a May deficit of $0.7B. The improvement occurred despite exports falling $0.7B (1.6%) as it was outpaced by an even larger $1.3B (3.2%) drop in imports.
The decrease in imports was led by a $0.7B plummet in the energy component though declines were also recorded in the metal and non-metallic mineral products ($0.3B) and motor vehicle and parts ($0.3B) components. The decrease in the later followed three months of gains. Some offset to these areas of weakness was provided by a $0.1B rise in the machinery and equipment component that augurs well for a recovery in business investment.
The drop in overall exports was largely concentrated in the metal and non-metallic mineral products component which fell $0.7B in the month.
According to experts at RBC Economics, "the May trade data is consistent with net exports providing a modest add to Q2 GDP growth although smaller than the percentage point and a half lift that occurred in the first quarter. Some offset will come from strengthening consumer spending though the overall."
