| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Balance | C$0.6B | C$1.939B | C$0.972B | C$0.231B |
| Imports - M/M | -0.2% | -2.9% | -2.1% | |
| Exports - M/M | 2.5% | -0.7% | -1.3% |
Highlights
Canada's merchandise trade surplus widened more than expected in April, when it reached C$1.939 billion, the largest since June 2022, topping Econoday's consensus forecast of C$600 million. The upward surprise was partly offset by a downward revision to March's surplus, now estimated at C$231 million, compared with C$972 million initially reported.
A 2.5 percent rebound in exports was the main driver behind April's surplus increase. Higher activity explained this recovery, as volumes were up 2.8 percent, reaching a record high level surpassing pre-pandemic levels. The picture was mixed, with 6 of 11 categories recording higher exports on the month.
A 13.6 percent increase in metal and non-metallic mineral products was a key driver of export gains, led by a 46.0 percent surge in unwrought gold on both higher prices and volumes. Statistics Canada explained the gold export advance by transfers of gold assets from financial institutions to the US amid higher economic uncertainty that typically leads investors to safe-haven metals such as gold and silver.
A 6.4 percent increase in energy exports was also a key driver in April, as well as a 7.4 percent gain in motor vehicles and parts.
That being said a downward revision to March's export estimate, now down 1.3 percent instead of minus 0.7 percent initially reported, tempered some of the upward surprise in April.
By contrast, imports contracted a further 0.2 percent on the month, with declines in 7 of 11 categories. The decrease was all price related, however, as import volumes were up 1.0 percent.
A 12.8 percent decline in energy contributed the most to April's import decline.
Consumer goods imports rose 4.0 percent. Yet this advance did not reflect stronger consumer spending on discretionary goods, and was instead related to a 28.1 percent surge in pharmaceutical products, which have explained most of the monthly import volatility in this category since February. Excluding pharmaceutical products, consumer goods imports were down 0.3 percent.
Regionally, the trade surplus with the US widened to C$9.5 billion from $C7.2 billion, the largest surplus since August 2022, as exports increased and imports decreased.
Meanwhile, the trade deficit with countries other than the US deteriorated to C$7.5 billion from C$7.0 billion as exports fell and imports edged up.
A 2.5 percent rebound in exports was the main driver behind April's surplus increase. Higher activity explained this recovery, as volumes were up 2.8 percent, reaching a record high level surpassing pre-pandemic levels. The picture was mixed, with 6 of 11 categories recording higher exports on the month.
A 13.6 percent increase in metal and non-metallic mineral products was a key driver of export gains, led by a 46.0 percent surge in unwrought gold on both higher prices and volumes. Statistics Canada explained the gold export advance by transfers of gold assets from financial institutions to the US amid higher economic uncertainty that typically leads investors to safe-haven metals such as gold and silver.
A 6.4 percent increase in energy exports was also a key driver in April, as well as a 7.4 percent gain in motor vehicles and parts.
That being said a downward revision to March's export estimate, now down 1.3 percent instead of minus 0.7 percent initially reported, tempered some of the upward surprise in April.
By contrast, imports contracted a further 0.2 percent on the month, with declines in 7 of 11 categories. The decrease was all price related, however, as import volumes were up 1.0 percent.
A 12.8 percent decline in energy contributed the most to April's import decline.
Consumer goods imports rose 4.0 percent. Yet this advance did not reflect stronger consumer spending on discretionary goods, and was instead related to a 28.1 percent surge in pharmaceutical products, which have explained most of the monthly import volatility in this category since February. Excluding pharmaceutical products, consumer goods imports were down 0.3 percent.
Regionally, the trade surplus with the US widened to C$9.5 billion from $C7.2 billion, the largest surplus since August 2022, as exports increased and imports decreased.
Meanwhile, the trade deficit with countries other than the US deteriorated to C$7.5 billion from C$7.0 billion as exports fell and imports edged up.
Market Consensus Before Announcement
April's trade balance is seen in surplus of C$0.6 billion versus March's surplus of just under C$1.0 billion.
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.
