Canada posts trade surplus as exports rebound

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Julian Beltrame
Ottawa— The Canadian Press
Published Thursday, Nov. 10, 2011 8:44AM EST
Last updated Thursday, Nov. 10, 2011 11:29AM EST


Canada continued to defy the global slowdown as recently as September, posting a surprisingly strong expansion in exports that gave the country its first trade surplus in eight months.

Economists said the rebound in exports, despite considerable headwinds from Europe and the United States, likely pushed the increase in Canada's gross domestic product to about three per cent in the third quarter. That would be one point higher than the Bank of Canada's recently revised call.

Statistics Canada said the combination of a 4.2-per-cent gain in exports and a 0.3-per-cent decline in imports resulted in an overall $1.2-billion trade surplus, following August's $487-million deficit.

In volume of shipments, taking currency fluctuations out of the calculation, the results were less flattering but still positive as exports rose 0.3 per cent and imports fell by 3.1 per cent.

Economists had expected another deficit in the neighbourhood of $500-million.

“This report solidifies the view that net exports are going to add meaningfully to Q3 real GDP growth,” said economist Benjamin Reitzes of BMO Capital Markets.

“Indeed, real exports surged 18.3-per-cent annualized in the quarter, the biggest gain in seven years, while real imports rose a tiny 0.2 per cent annualized.”

Analysts warned that the numbers don't suggest that Canada's economy will continue to buck the prevailing chilly winds being generated by crisis in Europe, sluggish growth in the U.S. and moderating activity in emerging countries.

Some of the trade strengths in September were due to temporary factors and aren't likely to be repeated in upcoming months, Scotiabank economists said.

Petroleum and coal volumes jumped 23.3 per cent in part because they were coming off several months of shutdowns at refineries.

As well, the decline in machinery and equipment imports gave off a negative signal that Canadian firms are tempering their enthusiasm for investments that will make them more efficient and competitive.

Still, September's export strength was more widespread than just the resources sector, as six of seven sub-groups registered gains, including a strong 5.6-per-cent pickup in auto shipments. Machinery was the only straggler, falling 4.9 per cent.

Overall, exports rose to $39.7-billion, the highest value since October 2008, as prices rose 3.9 per cent. Imports fell to $38.5-billion, as prices increased 2.8.

Exports to the United States increased five per cent to $28.2-billion, the highest value since January. Imports from the United States decreased one per cent to $23.8-billion.

As a result, Canada's trade surplus with the United States rose to $4.4-billion in September from $2.8-billion in August.

Exports to countries other than the United States rose 2.3 per cent to $11.5-billion, the fifth straight monthly increase. Imports from countries other than the United States rose 0.7 per cent to $14.7-billion.

Consequently, the trade deficit with countries other than the United States fell to $3.1-billion in September from $3.3-billion in August, the lowest level so far this year.