| Consensus | Consensus Range | Actual | Previous | Revised | |
| Balance | C$-1.5B | C$-6.3B to C$-0.3B | C$-0.583B | C$0.153B | C$0.243B |
| Imports - M/M | 3.4% | -4.1% | -4.3% | ||
| Imports - Y/Y | 0.9% | -1.9% | -1.8% | ||
| Exports - M/M | 2.1% | 6.3% | 6.7% | ||
| Exports - Y/Y | 0.9% | 0.3% | 0.6% |
Highlights
Canada's merchandise trade balance swung back into a deficit of C$583 million in October from a surplus of C$243 million in September as import growth outpaced export growth. Forecasters in an Econoday survey had expected a deficit of C$1.5 billion.
Imports rebounded 3.4 percent after contracting 4.3 percent in September. Exports progressed a further 2.1 percent in October on the back of an upwardly revised 6.7 percent advance the previous month.
Excluding the price effect, real imports were still up 2.6 percent while export volumes contracted 0.4 percent.
The review of the Canada-United States-Mexico Agreement (CUSMA) in July 2026 remains a significant risk for Canada's trade and growth outlook that the Bank of Canada will be closely watching.
In October, the value of imports increased across 8 of 11 categories, including a 10.2 percent gain in electronic and electrical equipment and parts. Metal and non-metallic mineral product imports were up 9.5 percent and metal ores and non-metallic minerals rose 16.4 percent. Industrial machinery, equipment and parts, an indicator of business investment activity, rose 5.7 percent, with gains in other general-purpose machinery and equipment, logging, construction, mining and oil and gas field machinery and equipment, and parts of industrial machinery and equipment.
By contrast, consumer goods imports edged down 0.1 percent, pointing to subdued domestic demand momentum.
Despite the overall 2.1 percent gain in October, the export picture was more mixed, as sales abroad decreased across 6 of 11 categories, including an 8.4 percent drop in energy products driven by crude oil and bitumen as refinery shut down in the United States and prices declined amid global oversupply.
Gold remained a strong contributor of exports in October, lifting exports of unwrought gold, silver, and platinum group metals and their alloys, a category mainly composed of unwrought gold. Excluding this group, total exports were actually down 2.5 percent. Reaching a new record high of C$13.1 billion, exports of metal and non-metallic mineral products soared another 27.3 percent in October after 25.0 percent in September. On a year-over-year basis, the surge was 46.1 percent. While the price effect has benefited gold exports, volumes were up 40 percent from October 2024.
Elsewhere, exports of motor vehicles and parts rose 4.1 percent.
Regionally, the surplus with the U.S. narrowed significantly to C$4.8 billion from C$8.4 billion, as exports fell 3.4 percent and imports increased 5.3 percent.
The deficit with countries other than the U.S. narrowed to C$5.4 billion from C$8.1 billion in September, the lowest deficit since January 2021.
When including services, Canada's total trade balance swung to a deficit of C$59 million from a surplus of C$607 million.
Market Consensus Before Announcement
The trade deficit is expected to widen slightly to C$1.5 billion from C$0.153 billion in September.
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.