| Consensus | Consensus Range | Actual | Previous | Revised | |
| Balance | C$3.0B | C$1.8B to C$3.0B | C$3.855B | C$4.243B | C$3.697B |
| Imports - M/M | 0.2% | -0.2% | 0.6% | ||
| Imports - Y/Y | 9.4% | 8.8% | 9.8% | ||
| Exports - M/M | 0.4% | 0.9% | 0.7% | ||
| Exports - Y/Y | 25.2% | 26.0% | 26.2% |
Highlights
Canada’s merchandise trade surplus widened more than expected in June, reaching C$3.855 billion, up from C$3.697 billion in May, with exports up 0.4 percent to a record C$77.5 billion, and imports up 0.2 percent to a record C$73.6 billion.
In the second quarter, exports rose 13.1 percent, the fastest quarterly increase since the third quarter of 2020, with nearly half due to energy. This supports the Bank of Canada's projection of an export rebound in the second quarter, with energy commodities as the main contributor. Imports rose 4.2 percent in the second quarter. In volume, exports were up 5.4 percent in the second quarter, while imports up 1.4 percent.
In June, the trade balance swung into a surplus of C$1.5 billion in March, which has been increasing since then despite a slowdown in monthly export growth from 10.2 percent in March, 3.4 percent in April, 0.7 percent in May and 0.4 percent in June.
In June, exports benefitted from higher volumes, up 1.1 percent from May, as well as demand for gold.
The average value of the Canadian dollar decreased by 1.7 cents US compared with May, the largest monthly decline since October 2022.
Behind the increase in export, the picture was mixed, with 6 of 11 categories rising on the month.
Exports of metal and non-metallic mineral products increased 16.5 percent, led by a 27.9 percent increase in unwrought gold, silver, and platinum group metals, and their alloys, a category largely composed of unwrought gold. Statistics Canada cited shipments to the UK and higher purchases of Canadian-held gold by foreign residents. This was partly offset by a 28.8 percent drop in unwrought aluminum and aluminum alloys exports.
Metal ores and non-metallic mineral exports rose a further 7.3 percent in June, including a 20.0 percent increase in copper ores and concentrates. Motor vehicles and parts were up 2.4 percent in a fifth consecutive advance.
A 10.0 percent drop in energy exports offset much of those gains.
Imports were up just 0.2 percent on the month, still reaching a record high C$73.6 billion. The gain was concentrated in 2 categories, as 9 of 11 sections posted declines from May, and entirely price related. Import volumes were indeed down 1.5 percent.
One of the two categories to post gains was electronic and electrical equipment and parts, up 11.7 percent on the month, without which imports would have been down 1.3 percent. Imports of farm, fishing and intermediate food products were also up on the month, by 0.7 percent.
Energy declined 1.4 percent, consumer goods was down 1.3 percent, and industrial machinery, equipment and parts down 3.3 percent, a negative signal for business investment.
Regionally, imports from the U.S. rose 3.0 percent while exports were up 0.3 percent, leading to a narrower surplus of C$10.0 billion, down from C$11.1 billion in May. Meanwhile, Canada's trade deficit with countries other than the United States narrowed to C$6.1 billion in June from C$7.4 billion in May.
Market Consensus Before Announcement
The surplus is expected to shrink to C$3.0 billion in June from C$4.243 billion in May.
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.