Canadian trade deficit widens in November, rise in imports outpaces exports growth

Canadian trade deficit broadened in the month of November. Deficit came in at CAD 2.5 billion, widening from October’s deficit of CAD 1.6 billion. The deficit widened as rise in imports surpassed those of exports. Exports grew 3.7 percent, while imports were up 5.8 percent. In real terms imports volumes grew 5 percent and export volumes were up 0.6 percent.

The growth in imports was broad based, with almost all industries recorded gains. Metal ores and non-metallic minerals, aircraft and other transportation equipment and parts and electronic and electrical equipment and parts led the rise in imports. Energy products were the only one to have recorded a decline in imports.

Growth in exports was also widespread, led by a recovery in motor vehicle and parts, which had dropped in the earlier four months. Consumer goods also had a robust growth in November, rising to the highest level seen in almost one year. But, exports excluding autos were soft, dropping 1.4 percent.

The strength of imports implies a return to normality in previously disrupted sectors such as autos, noted TD Economics in a research report. Still, the outperformance of imports signifies that net trade would weigh on growth in the month. However, the outlook of Canada’s trade picture continues to be bright.

“Going forward, the outlook for Canada's trade picture remains bright. A healthy US economy and a loonie sitting at around the 80 US cent level should keep demand for Canadian exports propped up, helping net trade support overall growth in the coming months”, added TD Economics.

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