Canada's trade surplus widened in August

Canada's merchandise trade surplus with the world widened in August in the wake of a decline in exports and an even sharper decrease in imports, which had hit a record high the month before.

Exports decreased 1.8% to $38.5 billion as only two sectors—machinery and equipment and agricultural and fishing products—recorded gains.

After peaking in July, imports fell 3.9% to $34.4 billion in August. Despite the considerable appreciation of the Canadian dollar against the American dollar since the beginning of 2007, August's decrease in imports was the result of widespread declines in all sectors except energy products and agricultural and fishing products.

With imports falling at twice the pace of exports, the nation's trade balance with the world expanded to $4.1 billion. At the same time, Canada's trade surplus with the United States widened to $6.7 billion.

The deficit with countries other than the United States narrowed to $2.6 billion, with all principal trading areas contributing to the contraction.

Exports decrease despite strong growth in machinery and equipment
Declines in exports of industrial goods and materials, and to a lesser extent automotive products, overshadowed gains in machinery and equipment and agricultural and fishing products, the only two sectors to record increases in August.

After hitting a record high in July, exports of industrial goods and materials contracted 9.0% to $8.8 billion. Although there was weakness in all areas of the sector, metal ores, particularly nickel, registered the largest decrease. Chemicals, plastics and fertilizers fell 4.3% to $2.8 billion, as exports of inorganic chemicals faltered.

Exports of automotive products declined 6.0% to $6.2 billion, following July's increase. The bulk of the decrease stemmed from passenger autos, which dropped 8.5% to $3.1 billion. Motor vehicle parts decreased 3.5% to $2.1 billion, while trucks and other motor vehicles declined for the fifth month in a row, falling below the $1-billion mark for the first time this year. Exports of automotive products have been on a downward trend since the start of 2007. Demand for motor vehicles in the United States has been weak over the summer months.

Exports of forestry products fell 1.0% to $2.4 billion, the fifth decrease in as many months. Canadian production has been curtailed by labour unrest in British Columbia. Newsprint and other paper and paperboard products also continued their downward trend, falling for the fifth consecutive month. On the other hand, wood pulp and other wood products that are used in the manufacture of paper rose 6.6% in August, as exports to China were especially strong.

Energy products slipped 0.3% to $7.2 billion, the third monthly decline. Increased exports of natural gas and other energy products, particularly coal and other bituminous substances, were offset by decreases in crude petroleum. The decline in crude petroleum was primarily the result of falling volumes, as prices decreased only marginally. In the case of natural gas, volumes rose while prices fell, whereas for coal, volumes rose much faster than prices.

Aircraft, engines and parts climbed 37.1% to $2.1 billion, propelling total exports of the machinery and equipment sector upwards 6.6% to $8.4 billion. Industrial machinery exports were up for the second consecutive month, rising 5.1% to a record high of $1.8 billion.

Following a dip in July, agricultural and fishing products were up 5.4% to $2.9 billion, as canola exports soared 35.2%. Canola production remained high as the burgeoning bio-diesel industry and the demand for high-quality specialty canola oils continued to support growth in this area.

Automotive products drive down imports
Imports decreased for the first time since May. Although the declines were widespread, the automotive products and industrial goods and materials sectors led the decrease. The only sector to record an increase was agricultural and fishing products.

Imports of automotive products tumbled 8.1% to $6.6 billion, partially reversing a gain in July, w...


Canada's National Statistical Agency
10/11/2007 6:21:47 AM