Canadian international trade records deficit in September

Canada recorded a trade deficit in the month of September, defying expectations of a surplus. The trade balance came in at a deficit of CAD 0.42 billion, as compared with expectations of a surplus of CAD 0.2 billion. This follows a revised deficit of CAD 0.55 billion in August.

The narrowing of the deficit in September was mainly due to falls in imports, which recorded a drop of 0.4 percent, outpacing the decline in exports of 0.2 percent. The move to deficit is due to a considerable upward revision to August’s imports, caused by the late reporting of three high-value ships that drove overall transportation sector imports up.

In real terms, the declines were more pronounced, with volumes of import declining 1.5 percent and those of exports falling 1.2 percent. The decline in imports was mostly led by a fall in aircraft and other transportation equipment because of a fall in the imports of ships. Energy imports dropped 11.5 percent on the month, led by a fall in both crude oil imports and refined petroleum products. Imports dropped in five out of the 11 sectors.

Exports came in mixed, with six out of the 11 sectors recording declines. The decline was mainly driven by a fall in consumer goods exports, which was mostly centred in food, beverage, and tobacco products. Energy exports gave slight offset, moving up 2.3 percent on the month, with a marked rise in refined petroleum energy products.

Canada’s trade surplus with the U.S. narrowed to CAD 4.8 billion in September, as imports rose more than exports.

Today’s was a disappointing report, stimulated further by the considerable revision to the August print. For the third quarter as a whole, import volumes dropped 1.2 percent, whereas exports volumes dropped less drastically by 0.3 percent. However, the widespread falls in both exports and imports affirms the decelerating momentum narrative, both domestically and globally, stated TD Economics in a research report.

“Going forward, strong U.S. export demand, greater trade certainty with USMCA, and a lagging Canadian dollar should support the export sector”, said TD Economics.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at -49.7946, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -71.3282. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex