| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Balance | C$-5.4B | C$-6.0B to C$-3.5B | C$-6.324B | C$-4.937B | C$-3.824B |
| Imports - M/M | 0.9% | -0.7% | -1.3% | ||
| Imports - Y/Y | 1.7% | 2.3% | 1.5% | ||
| Exports - M/M | -3.0% | 0.9% | 1.5% | ||
| Exports - Y/Y | -5.5% | -4.8% | -3.9% |
Highlights
Canada's merchandise trade deficit widened more than expected to reach C$6.3 billion in August from C$3.8 billion in July, as exports dropped 3.0 percent on the month. Forecasters in an Econoday survey had expected a deficit of C$5.4 billion.
The decline in exports after three consecutive monthly gains, was related to weaker activity as volumes were down 2.8 percent.
Imports, by contrast, recovered 0.9 percent on higher prices after contracting 1.3 percent in July. Volumes were down 0.3 percent.
Decreases in exports were widespread across 8 of 11 categories, led by a 7.6 percent drop in metal and non-metallic mineral products. Just as the previous two months, unwrought gold, silver, and platinum group metals, and their alloys - a category largely composed of unwrought gold - were behind the August decline. Following the implementation of higher anti-dumping and countervailing duty rates on Canadian softwood lumber that took effect in the United States in late July and early August, exports of lumber and other sawmill products plunged 25.4 percent. This contributed to a 10.1 percent drop in exports of forestry products and building and packaging materials. Elsewhere, industrial machinery, equipment and parts were down 9.5 percent motor vehicles and parts fell 3.9 percent. By contrast, consumer goods exports increased 3.0 percent.
While imports increased on the month, they were down in 6 of 11 categories, led by a 24.2 percent gain in metal and non-metallic mineral driven by unwrought gold. Excluding this category, imports actually contracted 1.0 percent. The volatility around imports of gold continues against a backdrop of tariff tensions with the U.S. Energy was also down in August, by 12.8 percent. On the upside, consumer goods rose 2.3 percent, partly on higher prices.
Regionally, exports to the U.S. decreased 3.4 percent and imports fell 1.4 percent, reducing the trade surplus to C$6.4 billion in August from C$7.4 billion in July. Year-to-date, exports to the U.S. have decreased 3.3 percent from the same period in 2024.
The deficit with countries other than the U.S. widened to a record C$12.8 billion from C$11.2 billion in July, as exports were down 2.0 percent and imports rose 4.2 percent to a record high.
When including services, Canada's total trade deficit widened to C$6.0 billion from C$3.5 billion.
The decline in exports after three consecutive monthly gains, was related to weaker activity as volumes were down 2.8 percent.
Imports, by contrast, recovered 0.9 percent on higher prices after contracting 1.3 percent in July. Volumes were down 0.3 percent.
Decreases in exports were widespread across 8 of 11 categories, led by a 7.6 percent drop in metal and non-metallic mineral products. Just as the previous two months, unwrought gold, silver, and platinum group metals, and their alloys - a category largely composed of unwrought gold - were behind the August decline. Following the implementation of higher anti-dumping and countervailing duty rates on Canadian softwood lumber that took effect in the United States in late July and early August, exports of lumber and other sawmill products plunged 25.4 percent. This contributed to a 10.1 percent drop in exports of forestry products and building and packaging materials. Elsewhere, industrial machinery, equipment and parts were down 9.5 percent motor vehicles and parts fell 3.9 percent. By contrast, consumer goods exports increased 3.0 percent.
While imports increased on the month, they were down in 6 of 11 categories, led by a 24.2 percent gain in metal and non-metallic mineral driven by unwrought gold. Excluding this category, imports actually contracted 1.0 percent. The volatility around imports of gold continues against a backdrop of tariff tensions with the U.S. Energy was also down in August, by 12.8 percent. On the upside, consumer goods rose 2.3 percent, partly on higher prices.
Regionally, exports to the U.S. decreased 3.4 percent and imports fell 1.4 percent, reducing the trade surplus to C$6.4 billion in August from C$7.4 billion in July. Year-to-date, exports to the U.S. have decreased 3.3 percent from the same period in 2024.
The deficit with countries other than the U.S. widened to a record C$12.8 billion from C$11.2 billion in July, as exports were down 2.0 percent and imports rose 4.2 percent to a record high.
When including services, Canada's total trade deficit widened to C$6.0 billion from C$3.5 billion.
Market Consensus Before Announcement
The consensus looks for a deficit at C$5.4 billion in August, up from C$4.9 billion in July.
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.
