International Trade Balance Widened to 9-Month High in October

International Trade Balance Widened to 9-Month High in October

Andrew Cummings
December 5, 2017

Canada's merchandise trade deficit in October narrowed from the previous month to a seasonally adjusted 1.47 billion Canadian dollars ($1.16 billion), Statistics Canada said Tuesday.

"Looking ahead, exports should manage to gain some traction, supported by a healthy USA economy and a Canadian dollar hovering around the 80 United States cent mark", says Ignjatovic.

The BoC is scheduled to make its next interest rate announcement on Wednesday.

Exports totalled $44.5 billion in October, as gains were made in nine of 11 sectors.

Exports of basic and industrial chemical, plastic and rubber products gained 12.4%, while metal and non-metallic mineral products increased 4.5%.

Exports of services grew 0.5% to $65.6 billion. Import volumes fell 3.9 per cent while prices rose 2.4 per cent.

Imports dipped by 1.6 per cent on weaker demand for motor vehicles and parts amid work stoppages and planned shutdowns in the automotive industry. As a result, the trade surplus with the United States, which accounted for 74.9 per cent of Canadian goods exports in October, expanded to $3.52 billion from $2.02 billion in September.

USA imports of goods and services rose to the highest on record in October, widening the trade gap to its highest level in nine months, according to government data released on Tuesday (Dec 5). Economists attribute the chronic trade deficit the USA has faced for decades to Americans consuming more than they produce relative to the rest of the world's economies.

Year-to-date, the goods and services deficit increased $49.1 billion, or 11.9%, from the same period in 2016. Exports of goods to Mexico rose US$22.1 billion for the month, a three-year high.

To be sure, the export categories that dropped in October are typically volatile and prone to large swings from month to month, so soybeans or civilian aircraft exports could pick up again in 2017's remaining two months.

The agency says the shortfall was less than half the $3.4-billion deficit in September. But that was overwhelmed by a $69.1 billion deficit in the trade of goods.

Imports of mobile phones rose US$300 million as did transportation services.

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