| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Balance | C$0.8B | C$1.392B | C$0.496B | C$0.608B |
| Imports - M/M | 4.6% | -3.8% | -3.1% | |
| Exports - M/M | 5.8% | -1.7% | -1.2% |
Highlights
Canada's goods surplus widened much more than expected in February amid rebounding trade activity, as it reached C$1.392 billion, up from an upwardly revised surplus of C$608 million in January.
Exports grew 5.8 percent, the largest expansion since August 2023. The advance more than offset January's 1.2 percent drop and outpaced a 4.6 percent increase in imports, which had contracted 3.1 percent in January.
In real terms, exports rose 6.2 percent and imports 4.1 percent, showing that higher trade figures were led by stronger volumes.
Gains in exports were widespread across 9 of 11 sectors, led by a 31.1 percent surge in metal and non-metallic mineral products. Unwrought gold, silver, and platinum group metals and their alloys mostly unwrought gold jumped 68.8 percent. More than half of total export growth owed to gains in unwrought gold, without which total exports would have been up 2.8 percent instead of 5.8 percent. Statistics Canada cited increased high-value shipments of refined gold and transfers of gold assets in the banking sector. These developments occurred amid a sharp appreciation in gold prices at the end of February.
Elsewhere, exports of farm, fishing and intermediate food products rose 9.7 percent, the largest increase since July 2023. Motor vehicles and parts were up 3.8 percent, energy up 0.4 percent and consumer goods 3.8 percent.
On the import front, gains were also broad based across 10 of 11 sectors, metal and non-metallic mineral products being the only category to contract, by 0.6 percent. Imports of electronic and electrical equipment and parts increased 9.7 percent to a record C$7.6 billion. Consumer goods were up 3.3 percent, machinery, equipment and parts 3.6 percent, and energy 10.2 percent.
Regionally, the surplus with the US widened to C$9.1 billion in February from C$8.8 billion in January. Meanwhile, Canada's trade deficit with countries other than the US narrowed to C$7.7 billion from C$8.2 billion.
In services, exports rebounded 1.9 percent on the month while imports rose a further 0.8 percent. The combined trade and services balance with the world went to a surplus of C$0.4 billion from a deficit of C$0.6 billion.
Exports grew 5.8 percent, the largest expansion since August 2023. The advance more than offset January's 1.2 percent drop and outpaced a 4.6 percent increase in imports, which had contracted 3.1 percent in January.
In real terms, exports rose 6.2 percent and imports 4.1 percent, showing that higher trade figures were led by stronger volumes.
Gains in exports were widespread across 9 of 11 sectors, led by a 31.1 percent surge in metal and non-metallic mineral products. Unwrought gold, silver, and platinum group metals and their alloys mostly unwrought gold jumped 68.8 percent. More than half of total export growth owed to gains in unwrought gold, without which total exports would have been up 2.8 percent instead of 5.8 percent. Statistics Canada cited increased high-value shipments of refined gold and transfers of gold assets in the banking sector. These developments occurred amid a sharp appreciation in gold prices at the end of February.
Elsewhere, exports of farm, fishing and intermediate food products rose 9.7 percent, the largest increase since July 2023. Motor vehicles and parts were up 3.8 percent, energy up 0.4 percent and consumer goods 3.8 percent.
On the import front, gains were also broad based across 10 of 11 sectors, metal and non-metallic mineral products being the only category to contract, by 0.6 percent. Imports of electronic and electrical equipment and parts increased 9.7 percent to a record C$7.6 billion. Consumer goods were up 3.3 percent, machinery, equipment and parts 3.6 percent, and energy 10.2 percent.
Regionally, the surplus with the US widened to C$9.1 billion in February from C$8.8 billion in January. Meanwhile, Canada's trade deficit with countries other than the US narrowed to C$7.7 billion from C$8.2 billion.
In services, exports rebounded 1.9 percent on the month while imports rose a further 0.8 percent. The combined trade and services balance with the world went to a surplus of C$0.4 billion from a deficit of C$0.6 billion.
Market Consensus Before Announcement
February's trade balance is seen in surplus of C$0.8 billion versus January's C$0.5 billion surplus that masked declines for both imports and 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.
