| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Balance | C$-2.7B | C$-3.732B | C$-3.439B | C$-2.680B |
| Imports - M/M | -0.5% | 3.0% | ||
| Exports - M/M | -2.2% | -3.8% | -3.0% |
Highlights
Canada's merchandise trade deficit widened further in June to C$3.732 billion. Econoday's consensus called for a deficit of C$2.7 billion. May's trade gap was revised to C$2.680 billion from C$3.439 billion previously reported.
The wider June deficit reflected a drop of 2.2 percent in exports and a decline of 0.2 percent in imports.
Exports in real terms fell 1.1 percent in June while export prices continued to decline for the 11th time in the last 12 months.
From June 2022 to June 2023, total export prices decreased 14.2 percent but the value of total exports declined 12.3 percent during the same period, meaning that exports in real terms increased.
Leading the decline in June from May: exports of metal and non-metallic mineral products, down 8.0 percent. Several other products contributed significantly to the decline in exports in June, mainly because of lower volumes. These included: exports of industrial machinery, equipment and parts, down 5.0 percent; exports of basic and industrial chemical, plastic and rubber products, down 5.7 percent; and exports of farm, fishing and intermediate food products, down 4.4 percent. Nine of the 11 export product categories declined.
On the imports side, seven of 11 product categories lost ground. Imports of energy products fell 13.0 percent, with refined petroleum products down the most, 17.0 percent, mostly because of lower gasoline imports. Imports of consumer goods were down 1.9 percent, mostly because of lower pharmaceutical inflows. Imports of metal and non-metallic mineral products jumped 12.9 percent and party offset the overall decline in imports.
Regionally, exports to countries other than the United States decreased 5.5 percent while imports from these countries edged down 0.1 percent. As a result, Canada's merchandise trade deficit with countries other than the United States rose from C$10.4 billion in May to a record high of C$11.2 billion in June.
In June, exports to the United States were down 1.2 percent while imports decreased 0.7 percent. This meant Canada's trade surplus with the United States narrowed from C$7.7 billion in May to C$7.4 billion in June.
Statistics Canada said a strike at British Columbia marine port terminals starting on July 1 would have a big impact on July exports data as it disrupted activity for 13 days. Separately, flooding in Nova Scotia was expected to dampen July imports in the port of Halifax.
The wider June deficit reflected a drop of 2.2 percent in exports and a decline of 0.2 percent in imports.
Exports in real terms fell 1.1 percent in June while export prices continued to decline for the 11th time in the last 12 months.
From June 2022 to June 2023, total export prices decreased 14.2 percent but the value of total exports declined 12.3 percent during the same period, meaning that exports in real terms increased.
Leading the decline in June from May: exports of metal and non-metallic mineral products, down 8.0 percent. Several other products contributed significantly to the decline in exports in June, mainly because of lower volumes. These included: exports of industrial machinery, equipment and parts, down 5.0 percent; exports of basic and industrial chemical, plastic and rubber products, down 5.7 percent; and exports of farm, fishing and intermediate food products, down 4.4 percent. Nine of the 11 export product categories declined.
On the imports side, seven of 11 product categories lost ground. Imports of energy products fell 13.0 percent, with refined petroleum products down the most, 17.0 percent, mostly because of lower gasoline imports. Imports of consumer goods were down 1.9 percent, mostly because of lower pharmaceutical inflows. Imports of metal and non-metallic mineral products jumped 12.9 percent and party offset the overall decline in imports.
Regionally, exports to countries other than the United States decreased 5.5 percent while imports from these countries edged down 0.1 percent. As a result, Canada's merchandise trade deficit with countries other than the United States rose from C$10.4 billion in May to a record high of C$11.2 billion in June.
In June, exports to the United States were down 1.2 percent while imports decreased 0.7 percent. This meant Canada's trade surplus with the United States narrowed from C$7.7 billion in May to C$7.4 billion in June.
Statistics Canada said a strike at British Columbia marine port terminals starting on July 1 would have a big impact on July exports data as it disrupted activity for 13 days. Separately, flooding in Nova Scotia was expected to dampen July imports in the port of Halifax.
Market Consensus Before Announcement
June's trade balance is seen in deficit of C$2.7 versus May's deficit of C$3.4 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.
