| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Balance | C$0.8B | C$2.967B | C$2.038B | C$1.121B |
| Imports - M/M | -2.8% | 1.0% | 0.8% | |
| Exports - M/M | 0.1% | 2.7% | 1.4% |
Highlights
Canada's goods trade surplus widened more than expected in October, reaching C$3.0 billion (C$2.967 billion), the largest surplus since June 2022. The surplus topped Econoday's consensus of C$0.8 billion as imports dropped. September's surplus estimate was slashed to C$1.1 from C$2.0 billion.
A 2.8 percent drop in imports was the main reason behind October's surplus widening due to lower activity, as volumes fell 3.2 percent. Declines were widespread across 8 of 11 categories, led by a nearly 15 percent plunge in metals and non-metallic mineral products. Lower gold asset transfers in the banking sector have been the main driver behind declines since the record high reached in June 2023. Imports of motor vehicles and parts were down 5.8 percent, the first decline since March 2023. Consumer goods fell 0.7 percent, in line with other measures of weakening household demand.
Exports edged up 0.1 percent in a fourth consecutive increase. Volumes were down 0.1 percent. The picture was mixed, with declines in 6 of 11 categories. Excluding a 1.2 percent decrease in energy, exports were up 0.5 percent on the month. Basic and industrial chemical, plastic and rubber products decreased 3.5 percent. On the upside, aircraft and other transportation equipment and parts increased 15.0 percent to C$2.9 billion, the highest level since January 2021.
Regionally, the trade surplus with the United States widened to C$12.1 billion from C$11.0 billion. Canada's merchandise trade deficit with countries other than the United States narrowed to C$9.1 billion in October from $9.9 billion in September.
Over the month, monthly trade services exports rose 0.3 percent and imports decreased 0.5 percent. Canada's goods and services trade balance went from a deficit of C$288 million in September to a surplus of C$1.7 billion in October.
A 2.8 percent drop in imports was the main reason behind October's surplus widening due to lower activity, as volumes fell 3.2 percent. Declines were widespread across 8 of 11 categories, led by a nearly 15 percent plunge in metals and non-metallic mineral products. Lower gold asset transfers in the banking sector have been the main driver behind declines since the record high reached in June 2023. Imports of motor vehicles and parts were down 5.8 percent, the first decline since March 2023. Consumer goods fell 0.7 percent, in line with other measures of weakening household demand.
Exports edged up 0.1 percent in a fourth consecutive increase. Volumes were down 0.1 percent. The picture was mixed, with declines in 6 of 11 categories. Excluding a 1.2 percent decrease in energy, exports were up 0.5 percent on the month. Basic and industrial chemical, plastic and rubber products decreased 3.5 percent. On the upside, aircraft and other transportation equipment and parts increased 15.0 percent to C$2.9 billion, the highest level since January 2021.
Regionally, the trade surplus with the United States widened to C$12.1 billion from C$11.0 billion. Canada's merchandise trade deficit with countries other than the United States narrowed to C$9.1 billion in October from $9.9 billion in September.
Over the month, monthly trade services exports rose 0.3 percent and imports decreased 0.5 percent. Canada's goods and services trade balance went from a deficit of C$288 million in September to a surplus of C$1.7 billion in October.
Market Consensus Before Announcement
October's trade balance is seen in C$0.8 billion surplus versus September's surplus of C$2.0 billion when gains in exports, up 2.7 percent on the month, exceeded gains in imports, up 1.0 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.
