Canada: Trade deficit held steady at -$3.2 billion in September – RBC Economics

Canada’s non-energy export volumes declined for a fourth consecutive month with the cumulative drop more than reversing what had been an encouraging increase over the prior three months, explains Nathan Janzen, Senior Economist at RBC Economics.  

Key Quotes

“Energy shipments provided some offset, rising 4.6% in volume terms.  Part of the recent non-energy export weakness has been related to production disruptions in the auto and chemical sectors over the summer.  We continue to expect modest growth in exports going forward as global trade flows improve and demand from the U.S. industrial sector strengthens.  Nonetheless, it is clearly difficult to argue that there has been much of an acceleration in external demand year to-date in 2017 with annual export growth not tracking significantly different than the 1.0% increase last year.”  

“On the other hand, domestic demand still looks relatively solid.  Goods import volumes inched 0.9% lower in Q3 (at an annualized rate) but that retraced little of an 11.2% surge in Q2.  Another quarterly increase in equipment imports notwithstanding softer readings in August and September mean business investment probably rose again in Q3.”

“Highlights:

• Energy exports rose 4.6% but that was offset by a fourth consecutive monthly drop in non-energy shipments.
• Import growth has also softened but unlike exports not enough to retrace earlier strength.”