Canada recorded a trade deficit of CAD 1.1 billion in July, after a revised deficit of CAD 55 million in June. This was larger than consensus estimates for a modes CAD 0.35 billion deficit. Exports fell 0.9 percent to CAD 49.8 billion, while imports rose 1.2 percent to CAD 50.9 billion. After accounting for price impacts, export volumes dropped 0.1 percent, whereas import volumes rose 2.3 percent.
The fall in exports was seen in just 5 of the 11 categories, and was greatly driven by a 6.7 percent slump in energy exports on falling crude oil prices. Exports of farm, fishing, and intermediate food products and aircraft and other transportation equipment were also markedly down. A solid rise in exports of metals and non-metallic mineral products provided some offset.
Meanwhile, imports rose in six out of 11 products categories. Consumer goods and the volatile aircraft and other transportation equipment category added the most to the increase. Imports of industrial machinery and equipment and metal ores and non-metallic minerals also rose in the month.
Canada’s nominal merchandise trade surplus with the U.S. narrowed to CAD 4.6 billion in July, while the merchandise trade deficit with the remainder of the world widened to CAD 5.7 billion.
“July's international merchandise trade data will likely fly by unnoticed. The report came in largely as expected, and June and July's soft prints provide for a relatively subdued handoff heading into the third quarter, with net trade unlikely to repeat its second quarter impact on GDP growth”, said TD Economics in a research report.
