Canada Sept trade deficit shrinks as imports fall faster than exports

Daniel Fowler
November 6, 2019

Crude oil volumes fell for a second consecutive month following a July peak, coinciding with a cut in Canadian North Atlantic oil platform production. The shortfall was at $2.41 billion in August this year. Drop in exports of metals and non-metallic mineral products and energy products drove the fall in exports.

Total exports fell 1.3 percent to Can$49.8 billion in September, largely offsetting an increase in August.

The weakness in the report is consistent with the view from the Bank of Canada that ongoing trade conflicts between the USA and China is hitting business investment in Canada and weighing on exports.

Last week, the Bank of Canada said the Canadian economy was not immune to global trade conflicts, including tensions between the United States and China.

Imports of iron and steel products were also lower. Ottawa and Beijing are locked in a trade and diplomatic dispute.

The Canadian dollar was little changed after the release, up 0.1 per cent to $1.3133 against its US counterpart at 8:50 a.m. Toronto time.

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The trade deficit totaled $3.12 billion in September from $4.02 billion during the same month in 2018.

Canola exports fell nearly 50 percent, reaching their lowest level in more than six years after China blocked imports.

Imports dropped 1.7 per cent in September on fewer metal and non-metallic mineral product shipments, particularly gold.

"While this looks like a soft report, the declines in two-way trade were anticipated and not any worse than we had feared", said Andrew Grantham of CIBC Economics.

Exports to the United States fell 0.6 per cent in September, while imports moved down 0.4 per cent.

As a result, Canada's bilateral trade surplus shrank to C$4.76 billion in September from C$4.85 billion in August.

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