Canada Posts Larger Trade Surplus Than Expected


Canada's merchandise imports and exports both declined in March, largely due to volume reductions. Imports decreased more than twice as fast as exports, leading to the widening of Canada's trade surplus with the world from $262 million in February to $1.1 billion in March.

Imports fell 4.4% to $31.4 billion as most sectors posted decreases. Energy products registered the largest decline, followed by machinery and equipment, as well as industrial goods and materials. Since the peak of July 2008, imports have fallen by more than $8.0 billion, mainly as a result of declines in the energy products and automotive products sectors.

Exports were down 1.8% to $32.5 billion, largely reflecting a decline in exports to the United States. Increased exports to the European Union moderated the decline. Overall exports have fallen by $11.8 billion since reaching their highest level in July 2008, primarily as a result of lower exports of energy products in the latter part of 2008.

Canada's trade surplus with the United States remained at $3.6 billion in March, virtually unchanged from February. Exports to the United States decreased 4.1% while imports declined 4.7%.

Canada's trade deficit with countries other than the United States narrowed to $2.5 billion in March from $3.3 billion in February, as exports increased 4.5% while imports decreased 3.9%.

While both imports and exports posted gains in February and fell in March, the pace of decline in March was considerably slower than those observed at the end of 2008 and in January 2009.

Energy products fell by 18.4% to $2.3 billion, the lowest level since October 2004. Imports of other energy products, down 33.2%, led the decline while imports of crude petroleum decreased 2.1%. The volume of energy products declined 16.2% in March while prices decreased 2.7%.

Imports of machinery and equipment declined 4.5% to $9.6 billion in March, following a 4.0% increase in February. Aircraft and other transportation equipment as well as industrial and agricultural machinery accounted for almost three-quarters of the decline in imports.

Industrial goods and materials imports were down 4.5% to $6.6 billion, mainly due to volume reduction. Although the declines were broad based, a decline in imports of pipes and tubes for drilling was the main contributor. Volumes have generally been declining in this sector since August 2008.

Machinery and equipment and automotive products accounted for almost two-thirds of the decline in exports in March, followed by energy products.

Machinery and equipment exports decreased 3.4% to $7.7 billion as volumes declined, largely as a result of lower exports of aircraft and telecommunication equipment. Other transportation equipment moderated the sector's decline on the strength of locomotive exports.

Automotive product exports, trending downward since December 2006, fell 3.3% to $3.4 billion due to decreases in exports of trucks and motor vehicle parts. Exports of passenger autos increased for the second month in a row, following January's plant shutdowns. Overall, the decline in automotive products was mainly due to volume reduction.

Exports of energy products contracted 1.4% to $6.5 billion in March due to a decline in volumes, as prices increased for the first time since July 2008. Lower exports of petroleum and coal products and natural gas were responsible for the weakness in this sector, which has been on a downward trend since June 2008.


TradingEconomics.com, Statistics Canada
5/12/2009 9:16:46 AM