Canada trade deficit narrows less than expected in January
Canada’s merchandise trade deficit narrowed to CAD 4.25 billion in January 2019 from an upwardly revised all-time high CAD 4.82 billion in the previous month and compared with market expectations of a CAD 3.5 billion shortfall.
It was the second largest trade gap on record. Exports rose 2.9 percent, the first increase since July, mainly on the strength of higher crude oil export prices and imports increased at a softer 1.5 percent, led by aircraft purchases.
Exports went up 2.9 percent to CAD 47.6 billion in January, the first rise since July last year. Sales of energy products increased for the first time after five consecutive monthly decreases (14 percent to CAD 7.1 billion), name crude oil (36.5 percent) on the strength of a 36.0 percent rise in prices.
The price of crude oil exports dropped sharply in the second half of 2018, falling by more than 50 percent from July to December.
Also, sales of metal and non-metallic mineral products advanced 11.9 percent to CAD 5.6 billion in January, the strongest monthly gain since March 2014, mainly due to higher exports of refined gold to the UK, as well as an increase in gold transfers to Hong Kong within the banking sector.
Higher exports of energy products and metal and non-metallic mineral products were partially offset by lower exports of farm, fishing and intermediate food products.
Excluding energy products, exports rose 1.2% in January. On the other hand, sales of farm, fishing and intermediate food products fell 8.1 percent to CAD 3.1 billion, mostly other crop products (-25.4 percent), mainly due to lower exports of soybeans to China.
This comes on the heels of record exports of Canadian soybeans to China in 2018, a peak that coincided with strong decreases in US exports of soybeans to China.
Exports to the US increased 1.1 percent to CAD 34.0 billion, primarily on the strength of higher sales of crude oil. Exports to countries other than the US went up 7.9 percent to CAD 13.6 billion, namely to the UK (gold).
Other countries, such as Hong Kong (gold) and Saudi Arabia (other transportation equipment) also contributed to the increase, while China (soybeans) recorded the largest decrease.
Imports rose 1.5 percent to a record CAD 51.8 billion, mainly boosted by higher purchases of aircraft and other transportation equipment and parts (52.6 percent to a record CAD 2.7 billion) were moderated by lower imports of energy products.
Meanwhile, purchases of energy products decreased 12.1 percent to CAD 2.8 billion, mostly refined petroleum products (-16.0 percent).
Imports from the US increased 1.8 percent to CAD 32.5 billion, namely aircraft. Imports from countries other than the US advanced 1.1 percent to CAD 19.4 billion, surpassing the record set in December.
A number of countries contributed to the increase, including Belgium (pharmaceutical products), the UK (aircraft and aircraft parts), Saudi Arabia (crude oil), China (various products) and Mexico (various products).
These gains were partially offset by lower imports from Brazil (bauxite) and South Korea (iron and steel products). ■