Canada's goods-trade surplus with the rest of the world expanded in October to its largest level since mid-2019. While exports saw a slight increase, imports were negatively impacted by supply disruptions caused by U.S. auto strikes.
According to Statistics Canada, the country recorded a merchandise-trade surplus of 2.97 billion Canadian dollars ($2.18 billion) for the month.
This marks the third consecutive month that Canada has achieved a trade surplus. However, September's surplus was revised down from C$1.12 billion to C$917 million.
In October, merchandise exports inched up by 0.1% to C$65.98 billion, marking the fourth consecutive monthly rise. On the other hand, imports experienced a decline of 2.8% to C$63.01 billion.
Notably, exports to the United States, which is Canada's largest export market, decreased by 1% after three months of growth. Meanwhile, imports from the U.S. were 3.9% lower. Consequently, Canada's trade surplus with its neighbor widened for the fourth straight month to C$12.09 billion from C$11 billion in the prior month.
Additionally, exports to countries other than the U.S. saw a 3.9% increase compared to the previous month, while imports declined.
The rise in global exports was primarily driven by a surge in shipments of aircraft and transportation equipment, mainly due to higher exports of such equipment to Saudi Arabia.
However, exports of energy products experienced a 1.2% decline in the month, primarily due to a decrease in crude oil shipments, which had shown significant growth in the third quarter of the year. Excluding energy products, exports for October increased by 0.5% compared to September.
Imports of Metal and Mineral Products Fall Sharply
Imports of metal and mineral products saw a significant decline, largely due to a drop in imports of unwrought precious metals. This decline was driven by a decrease in gold transfers within the banking sector.
Decline in Imports of Motor Vehicles and Parts
Imports of motor vehicles and parts experienced a decline of 5.8%, marking the first decrease in seven months. This decline can be attributed to unstable supply caused by labor strikes at U.S. automakers and lower imports from Mexico. Despite the monthly fall, imports of vehicles and parts have risen almost 21% since the beginning of the year compared to the same period last year.
Trade Surplus for Canada
On a volume-adjusted basis, exports slipped 0.1% in October, while imports fell 3.2%. However, when considering both goods and services, Canadian exports rose 0.1%, and imports fell 2.3%. This resulted in Canada's trade surplus shifting from a C$288 million deficit in the previous month to a surplus of C$1.69 billion in October.
Economic Outlook for Canada
The Canadian economy has experienced a significant cooldown in recent months, primarily due to high interest rates. The central bank anticipates a period of weaker growth before a pickup in late 2024. In the third quarter of this year, gross domestic product slightly contracted as a result of a decline in international exports and a slower inventory buildup by businesses.
Bank of Canada Interest Rate Decision
The Bank of Canada is scheduled to announce its decision on interest rates on Wednesday morning. Economists predict that policymakers will maintain the target for the overnight rate at 5%.
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