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Merchandise Trade Analysis – November 2016

Export volumes surge, giving Canada its first monthly trade surplus in more than two years

Canadian exporters had an excellent month in November. Broad-based gains drove total goods exports 4.3 per cent higher than in October, representing the best month-over-month increase since June 2015. Exports had been sluggish through the first half of 2016, but began to pick up in summer. Exports have now risen in five of the last six months, hitting $45.6 billion in November - their highest level since January.

exports jump

Meanwhile, there was a modest increase in imports of about 0.7 per cent in November. However, imports remain below summer levels and have, on the whole, been effectively flat through 2016. That trend, combined with the spike in exports in November, swung Canada's trade balance into the black for the first time in more than two years. After posting trade deficits which ran as high as $4.2 billion in September (albeit under exceptional circumstances), Canada recorded a trade surplus of $527 million in November - its first positive monthly trade balance since September 2014.

trade surplus

As opposed to October, when the increase in exports was driven by price effects, November's growth was driven largely by higher volumes. Export volumes jumped 3.5 per cent, while a 0.4 per cent increase in prices was just the icing on the cake. On the import side, the volume of goods entering Canada fell by 0.3 per cent, but the price of those goods rose by an average of 1.2 per cent.

November's trade number give much about which to be optimistic, but they come too late to save what will end up being a weak year for international trade in Canada. Through 11 months, exports are 1.2 per cent lower than they were last year, while imports are effectively unchanged compared to 2015.

Canadian Trade Summary
  Sep-16 Oct-16 Nov-16
Value ($billions)
Exports 43.5 43.7 45.6
Imports 47.7 44.8 45.1
Trade Balance -1.5 -1.0 0.5
       
Percentage change
Export prices 0.6 1.5 0.4
Export volumes -1.9 -0.7 3.5
Import prices 0.9 0.9 1.2
Import volumes 1.4 -6.2 -0.3


In recent months, Canada's slowly-improving export performance has been driven by two factors: a recovery in the value of crude oil and petroleum exports; and continued strength in the auto sector. In November, however, nearly every major industrial sector was able to share in the growth. There was double-digit growth in both raw metals and minerals, as well as products fabricated from those materials. Agriculture and food products exports rose 7.8 per cent, while aerospace exports rebounded by 7.7 per cent after three below-par months. In fact, 10 of the 11 major industrial categories posted higher export numbers in November. The only exception was motor vehicles and parts, foreign shipments of which dipped 1.9 per cent.

export growth by product type

As with product types, November's export gains were fairly widespread across Canada's major trading partners. On a dollar-value basis, the United States led the way, buying $836 million more in Canadian goods than in October. There were also broad gains in exports to the European Union ($339 million), as well as to China ($200 million).

Exports to some of Canada's smaller export destinations were up as well. Shipments to Brazil spiked more than 150 per cent, while sales in Norway (51.5 per cent), Iraq (41.8 per cent) and South Korea (41.2 per cent) were all sharply higher. The only notable decline was in exports to the United Kingdom, which were $230 million lower.
On the import side, there was a spike in deliveries of energy products (18.2 per cent) into Canada after three months of steady declines. Imports of food products were also higher, driven by higher-volume sales. Meanwhile, imports of industrial goods - machinery, electronics, and transportation equipment - were all lower.

Canada's top growing export markets

 

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