Canada's Trade Balance Declines in June

Canada's merchandise exports declined for the third straight month in June in the wake of the largest drop in the machinery and equipment sector in 15 months.

At the same time, imports rose marginally. As a result, Canada's merchandise trade surplus with the world narrowed to $5.3 billion in June from $5.9 billion in May.

Exports declined 1.0% to $39.3 billion from a revised $39.7 billion in May. While the machinery and equipment sector was responsible for most of the overall decrease, exports of automotive products also sustained significant declines.

Elsewhere, the value of exports to countries other than the United States fell, while the value of imports from those destinations grew, expanding the trade deficit with these countries to $2.4 billion.

Machinery and equipment as well as automotive products drag down exports
Declines in exports of machinery and equipment and, to a lesser extent, automotive products offset gains in exports of other consumer goods, industrial goods and materials and energy products.

After two significant increases in the last six months, which had pushed exports of aircraft and other transportation equipment above the $2-billion mark, these exports fell 18.7% to $1.7 billion in June. This drop led the machinery and equipment sector to its largest decline in 15 months, falling 4.2% in June to $7.9 billion.

Exports of automotive products declined for the third month in a row, falling 1.7% in June to $6.3 billion, as some plants closed earlier than usual in preparation for the production of new models. Passenger autos contracted 2.9% to $3.1 billion, while trucks and other motor vehicles declined 3.0% to $1.1 billion. Exports of motor vehicle parts rebounded from a decrease in May, edging up 0.9%.

Forestry products fell 1.2% to $2.5 billion, the third drop in as many months. As Canadian companies face competition in foreign markets from cheaper wood products originating in other countries, exports of wood pulp and other wood products, as well as paper and paperboard declined. Lumber and sawmill products rose 1.6% to $1.1 billion, but remained well below their record level of $1.9 billion observed in July 1999.

Exports of agricultural and fishing products slipped 0.5% to $2.8 billion. Declines in other agricultural products, particularly canola, and fish and fish preparations, eclipsed a 27.6% surge in wheat.

Other consumer goods were up 3.6% to $1.7 billion, as exports of various medications increased in June.

Exports of chemicals, plastics and fertilizers rose for the fourth consecutive month, setting a new high of $3.2 billion. This occurred again on the continued strength of inorganic chemicals, in particular uranium, which is shipped to enrichment plants. Despite this growth, the industrial goods and materials sector as a whole inched up only 0.2% to $9.1 billion, as significant declines in metal ores, particularly nickel and copper, dampened the hike in inorganic chemicals.

Energy products edged up 0.1% to $7.9 billion, as rising exports of crude petroleum and natural gas offset falling exports of petroleum and coal products. The increase in crude petroleum was entirely the result of higher volumes, as prices fell 3.1%. In the case of petroleum and coal products, both volumes and prices fell.

Imports rise following two months of decreases
The combined growth in imports of industrial goods and materials, and machinery and equipment more than compensated for the declines registered by the five remaining sectors in June. Of those, automotive products led the decrease, accounting for the majority of the total drop.

Imports of industrial goods and materials rose 3.6% to $7.2 billion, following three months of decline. Chemicals and plastics registered the largest increase in this sector, rising 6.0% to $2.6 billion, on the heels of four consecutive monthly declines. Imports of metals and metal ores also increased (+3.3%), largely on the strength of non-ferrous metals and alloys, specifically copper.

Increases in office machines and e...


Canada's National Statistical Agency
8/14/2007 5:45:59 AM