- The net trade balance held at a $0.1 billion surplus
- Exports fell 5.1% (and 2.2% excluding price effects)
- Import volumes dropped a larger 3.6% — including lower equipment imports
The small $0.1 billion surplus was a second consecutive positive balance – but details were soft with exports and imports both declining sharply. More than half of the 5% plunge in exports was accounted for by lower prices – so export volumes were down less in the month and still up a large 14.9% (annualized) in Q2 as a whole. But a 3.6% drop in June import volumes, including big declines in equipment imports, left imports down 3.4% for the quarter. The monthly trade data is notoriously volatile and revision prone. And net trade looks on track to potentially add more than four percentage points to Q2 GDP growth. But softer imports don’t bode so well for underlying domestic demand growth, particularly business investment.
Today’s data was bound to be overshadowed by yesterday’s surprise announcement that the Trump Administration is set to escalate US-China trade tensions once again via a 10% tariff on virtually all remaining US imports from China not targeted with new tariffs to-date. Canadian economic data has been looking better in recent months – including the international trade and manufacturing numbers (despite signs of slowing in the US industrial sector). But concerns, including at the Bank of Canada, remain on risks to the global outlook from escalating global trade tensions. And those do not appear to be going away any time soon.
