It seems that the surplus will continue to shrink this year and next because of a growing value of Canadian dollar that rose about 20 percent since the beginning of the year, making local goods less competitive abroad.
Exports decreased 2.3% to $37.7 billion in September, the lowest level since October 2006. Only three sectors—automotive products, energy products, and other consumer goods—recorded gains.
Imports rose 2.2% to $35.1 billion, recapturing some of the loss registered in August. Energy products were by far the prime force behind the rise, followed by industrial goods and materials, automotive products, and other consumer goods.
With imports rising and exports falling, the nation's trade balance with the world narrowed to $2.6 billion, falling to its lowest level since December 1998. The trade surplus with the United States shrank to $6.2 billion.
Canada's trade deficit with countries other than the United States expanded to $3.5 billion. All principal trading areas contributed to the increase, with the exception of Japan, as Canada's trade deficit with Japan decreased.
Between January and September 2007, based on the Bank of Canada's monthly noon spot rate average, the Canadian dollar appreciated 13% against its American counterpart, reaching parity at the end of September.
Exports decrease despite growth in automotive products, energy products, and other consumer goods
Sharp declines in exports of machinery and equipment, and industrial goods and materials, the two most important sectors in terms of value, overshadowed gains in automotive products, energy products, and other consumer goods.