| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Balance | C$1.2B | C$1.1B to C$1.8B | C$-0.312B | C$1.566B | C$1.061B |
| Imports - M/M | 0.2% | 1.9% | 1.4% | ||
| Exports - M/M | -1.9% | -0.6% | -1.0% |
Highlights
Amid weak trade activity and an appreciation of the Canadian dollar weighing on trade values, Canada's goods balance unexpectedly went to a deficit of C$312 million in December from a surplus of C$1.1 billion in November, which was revised down from C$1.6 billion. Econoday's consensus expectation had centered on a surplus of C$1.2 billion, with the lowest forecast at C$1.1 billion.
For 2023 as a whole, the merchandise trade balance went to a deficit of C$1.4 billion from a surplus of C$19.7 billion in 2022 as imports increased 1.4 percent while exports fell 1.4 percent.
In December, exports fell 1.9 percent from the previous month, while imports edged up 0.2 percent, leading to the first trade deficit since July 2023.
In volumes, exports contracted 0.4 percent on the month and increased 1.0 percent in the fourth quarter. Real imports rose 1.3 percent from November but contracted 0.5 percent for the second consecutive quarter.
Over the month, the loonie appreciated on average by 1.5 US cents, the largest monthly gain since May 2021. When expressed in US dollars, exports edged up 0.1 percent from November while imports rose 2.3 percent.
The value of exports was down across 7 of 11 categories, led by an 8.2 percent decrease in motor vehicles and parts as exports of passenger cars and light trucks dropped 11.6 percent due to the partial shutdown of models that will cease to be produced in Canada or will be produced at other Canadian plants. Energy exports were another drag, as they fell 3.1 percent on the month, led by a 4.9 percent drop in crude oil owing to lower prices amid excess supply combined with concerns over demand.
Despite the overall monthly increase, imports were down across 8 of 11 categories. If not for a record 9.4 percent monthly gain in consumer goods, imports would have fallen 2.0 percent in December. Metal and non-metallic mineral products, up 5.8 percent, also contributed to the monthly advance. Metal ores and non-metallic minerals were the third category to post gains (3.5 percent). Such increases were mostly offset by declines in other categories, including electronic and electrical equipment and parts; energy products; aircraft and other transportation equipment and parts; and motor vehicles and parts.
Regionally, the trade surplus with the US narrowed to C$9.2 billion from C$11.2 billion as exports fell 3.4 percent and imports rose 0.7 percent. Canada's trade deficit with countries other than the US narrowed to C$9.5 billion from C$10.1 billion.
In services, exports rose 1.3 percent on the month and imports 0.3 percent. The combined trade and services balance with the world went to a C$1.0 billion deficit in December from a C$0.2 billion surplus in November.
For 2023 as a whole, the merchandise trade balance went to a deficit of C$1.4 billion from a surplus of C$19.7 billion in 2022 as imports increased 1.4 percent while exports fell 1.4 percent.
In December, exports fell 1.9 percent from the previous month, while imports edged up 0.2 percent, leading to the first trade deficit since July 2023.
In volumes, exports contracted 0.4 percent on the month and increased 1.0 percent in the fourth quarter. Real imports rose 1.3 percent from November but contracted 0.5 percent for the second consecutive quarter.
Over the month, the loonie appreciated on average by 1.5 US cents, the largest monthly gain since May 2021. When expressed in US dollars, exports edged up 0.1 percent from November while imports rose 2.3 percent.
The value of exports was down across 7 of 11 categories, led by an 8.2 percent decrease in motor vehicles and parts as exports of passenger cars and light trucks dropped 11.6 percent due to the partial shutdown of models that will cease to be produced in Canada or will be produced at other Canadian plants. Energy exports were another drag, as they fell 3.1 percent on the month, led by a 4.9 percent drop in crude oil owing to lower prices amid excess supply combined with concerns over demand.
Despite the overall monthly increase, imports were down across 8 of 11 categories. If not for a record 9.4 percent monthly gain in consumer goods, imports would have fallen 2.0 percent in December. Metal and non-metallic mineral products, up 5.8 percent, also contributed to the monthly advance. Metal ores and non-metallic minerals were the third category to post gains (3.5 percent). Such increases were mostly offset by declines in other categories, including electronic and electrical equipment and parts; energy products; aircraft and other transportation equipment and parts; and motor vehicles and parts.
Regionally, the trade surplus with the US narrowed to C$9.2 billion from C$11.2 billion as exports fell 3.4 percent and imports rose 0.7 percent. Canada's trade deficit with countries other than the US narrowed to C$9.5 billion from C$10.1 billion.
In services, exports rose 1.3 percent on the month and imports 0.3 percent. The combined trade and services balance with the world went to a C$1.0 billion deficit in December from a C$0.2 billion surplus in November.
Market Consensus Before Announcement
December's trade balance is seen in surplus of C$1.2 billion versus November's surplus of C$1.6 billion that was held down by a jump in imports and a fall in exports.
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.
