- The international trade deficit narrowed to $1.1 billion
- Exports (-1.4% m/m) and imports (-2.4% m/m) both declined
- ‘Transitory’ factors once again at play, but recent Canadian data has been soft
The November international trade deficit narrowed, but only because imports posted a larger decline (-2.4% m/m) than exports (-1.4% m/m). Excluding the impact of price changes, export volumes declined a larger 1.9% and imports of machinery and equipment – a key indicator of Canadian domestic investment spending – declined.
Still, there were, once again, transitory factors at play. Energy export volumes plunged almost 11% as a major pipeline shutdown hampered oil exports. And the week-long CN rail strike weighed on both exports and imports, likely across a broad swath of products. The rail strike may also have prevented a bounce-back in trade in motor vehicles after a strike in the US impacted production chains in that sector in October – although the pending shutdown of most activity at Oshawa’s GM plant may also be limiting the rebound from that disruption.
So there are reasons to dismiss at least some of the weakness in November trade flows. But the data comes on the heels of a soft run of economic numbers for October – culminating in a 0.1% decline in GDP in that month – and follows a very soft November labour market report. The external trade backdrop arguably still has room to improve given some thawing in tensions between the US and China. But softer domestic data reports will keep attention focused on the next batch of Canadian reports, not the least of which will be the next round of employment numbers for December later this week.
