| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Balance | C$0.8B | C$-0.041B | C$1.214B | C$0.13B |
| Imports - M/M | -2.1% | 0.6% | 0.5% | |
| Exports - M/M | -2.3% | 1.5% | -0.2% |
Highlights
Canada's merchandise trade data for November indicated a weakening global trade activity, with declines in both imports and exports leading to a C$41 million deficit after a C$0.1 billion surplus in October. Forecasters in an Econoday survey had expected a C$0.8 billion surplus. Over the month, the Canadian dollar appreciated 1.4 cents US on average from October, the largest gain since October 2021, impacting both imports and exports.
Exports fell 2.3 percent in November after edging down 0.2 percent in October, with declines in 8 of 11 sectors, led by a 4.7 percent drop in energy. Excluding energy, exports were down 1.5 percent. Prices also played a large part as real exports decreased 1.4 percent in November. Consumer goods exports decreased 6.3 percent, with pharmaceutical and medicinal products down another 12.6 percent. Motor vehicles and parts dropped 6.4 percent, coinciding with a lower production in the US. Metal and non-metallic mineral products, farm, fishing and intermediate food products, and forestry products and building and packaging materials were the three categories recording higher exports.
Declines were also widespread across import categories, with 8 of them seeing a contraction in sales abroad, leading to a 2.1 percent import decrease in November after a 0.5 percent advance in October. Prices also explained a large part, as the decrease in volumes was a more muted 0.7 percent, still the third decline in a row. Consumer goods imports fell 5.7 percent after a 1.8 percent contraction in October. Pharmaceutical and medicinal products dropped 11.5 percent as drug imports fell, including Covid-related treatments and vaccines. Toys and games imports were also down after a"generally strong" year in 2022. Metal and non-metallic mineral products as well as aircraft and transportation equipment and parts also recoded declines in November, of 7.9 percent and 14.0 percent, respectively.
Regionally, the trade surplus with the US deteriorated to C$7.3 billion from C$8.6 billion as imports edged down 0.1 percent while exports fell 2.6 percent.
The trade deficit with countries other than the US narrowed to C$7.3 billion in November from C$8.4 billion in October.
Econoday's Consensus Divergence Index is now at 6, indicating the Canadian economy has been slightly outperforming.
Exports fell 2.3 percent in November after edging down 0.2 percent in October, with declines in 8 of 11 sectors, led by a 4.7 percent drop in energy. Excluding energy, exports were down 1.5 percent. Prices also played a large part as real exports decreased 1.4 percent in November. Consumer goods exports decreased 6.3 percent, with pharmaceutical and medicinal products down another 12.6 percent. Motor vehicles and parts dropped 6.4 percent, coinciding with a lower production in the US. Metal and non-metallic mineral products, farm, fishing and intermediate food products, and forestry products and building and packaging materials were the three categories recording higher exports.
Declines were also widespread across import categories, with 8 of them seeing a contraction in sales abroad, leading to a 2.1 percent import decrease in November after a 0.5 percent advance in October. Prices also explained a large part, as the decrease in volumes was a more muted 0.7 percent, still the third decline in a row. Consumer goods imports fell 5.7 percent after a 1.8 percent contraction in October. Pharmaceutical and medicinal products dropped 11.5 percent as drug imports fell, including Covid-related treatments and vaccines. Toys and games imports were also down after a"generally strong" year in 2022. Metal and non-metallic mineral products as well as aircraft and transportation equipment and parts also recoded declines in November, of 7.9 percent and 14.0 percent, respectively.
Regionally, the trade surplus with the US deteriorated to C$7.3 billion from C$8.6 billion as imports edged down 0.1 percent while exports fell 2.6 percent.
The trade deficit with countries other than the US narrowed to C$7.3 billion in November from C$8.4 billion in October.
Econoday's Consensus Divergence Index is now at 6, indicating the Canadian economy has been slightly outperforming.
Market Consensus Before Announcement
November's surplus is seen at C$0.8 billion versus $1.2 billion in October, a month boosted by a 1.5 percent rise in exports at the same time that imports declined 0.1 percent.
Definition
The merchandise trade balance measures the difference between imports and exports of goods. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade and can offer a guide to an economy's competitiveness. Nominal data are supplied with regards to principal trading partners and product classification.
Description
Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets. This is particularly true for Canada which relies on exports and particularly those to the U.S. for growth. It should be noted that this report focuses solely on goods trade - it leaves services trade for the quarterly national accounts and balance of payments reports.
Imports indicate demand for foreign goods while exports show the demand for Canadian goods in the U.S. and elsewhere. The Canadian dollar is particularly sensitive to changes in its trade balance with the U.S. For the most part, Canada's trade balance is in surplus thanks to its exports to the U.S. Both the nominal export and import values are split into volume (real) and price components. This permits trade data to be analyzed for both changes in trade patterns as well as changing prices. This has been particularly important of late given energy price volatility and the impact on Canada's merchandise shipments. A word of caution -- the data are subject to large monthly revisions. Therefore, it can be misleading to form opinions on the basis of one month's data.
The bond market is sensitive to the risk of importing inflation. This report gives a breakdown of trade with major countries so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
Imports indicate demand for foreign goods while exports show the demand for Canadian goods in the U.S. and elsewhere. The Canadian dollar is particularly sensitive to changes in its trade balance with the U.S. For the most part, Canada's trade balance is in surplus thanks to its exports to the U.S. Both the nominal export and import values are split into volume (real) and price components. This permits trade data to be analyzed for both changes in trade patterns as well as changing prices. This has been particularly important of late given energy price volatility and the impact on Canada's merchandise shipments. A word of caution -- the data are subject to large monthly revisions. Therefore, it can be misleading to form opinions on the basis of one month's data.
The bond market is sensitive to the risk of importing inflation. This report gives a breakdown of trade with major countries so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.
