Yahoo Finance High Energy, Gold Exports Help Narrow Canada’s Trade Deficit
(Bloomberg) -- Canada’s merchandise trade deficit narrowed on higher energy and gold exports.
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The country recorded a C$1.05 billion ($767 million) trade deficit in April, from C$1.99 billion a month earlier, Statistics Canada reported Thursday in Ottawa. That’s in line with the median estimate of economists in a Bloomberg survey.
Total exports rose 2.6% in April, while imports increased 1.1%. In volume terms, exports were up 1.7% and imports edged down 0.2%.
Exports of energy products — including natural gas, crude oil and propane — jumped the most that month. Unwrought gold exports also rose, with the increase primarily attributable to higher prices amid elevated safe haven demand driven by geopolitical risk in the Middle East and elevated purchasing from investors and central banks.
Imports of motor vehicles and parts posted the largest increase in April and marked the third straight monthly gain. Higher shipments of sport utility vehicles and light trucks drove the increase, which coincided with higher production in the US in March and April.
Following a 17.7% import decline in the transportation equipment category in March, driven by lower aircraft imports, the sector rebounded 23.7% on higher imports of ships in April. Specifically, Canada received several ships including a ferry from China that is set to run between Newfoundland and Nova Scotia.
April’s decrease in import volumes was driven by consumer goods, mainly clothing, footwear and accessories, suggesting weaker consumer demand heading into the second quarter.
“There is potential for net trade to make another small positive contribution to GDP growth in the second quarter, particularly if the Trans Mountain pipeline extension gives a boost to energy export volumes this month,” Olivia Cross of Capital Economics said in a report to investors. The expanded pipeline carrying oil to Canada’s west coast for shipment opened in May.
“However, given the decline in some import categories, we would be more concerned about a slowdown in domestic demand in the second quarter.”
Marc Ercolao, an economist at Toronto-Dominion Bank, also pointed out in a report to investors that April’s data pours some cold water on the prospects of a sustained upturn in domestic demand.
“Meanwhile, exports have been in a holding pattern for many months, showing stable conditions with major trading partners.”
--With assistance from Jay Zhao-Murray.
(Adds economist reaction.)
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