- Canadian Trade deficit narrowed to 1B, in line with consensus
- Non energy exports volumes were up 0.7%
- Imports volumes were also up, but with weak details
Canadian trade deficit narrowed to $1B in August up from a revised $1.4B deficit in July. The details of today’s report were arguably softer than the headline numbers implied. Non-energy export volumes increased about 1% month-over-month by our count, but driven largely from an increase in exports of aircraft and other transportation equipment which grew by 13.2%. That increase is likely not to be repeated in the coming months. After accounting for price effects, energy exports were also down 2.2% in August. Despite the fact that imports volumes were up— much of which was driven from gold, a pullback in equipment imports does not bode well for near-term business investment growth.
The notoriously volatile nature of the data makes us hesitant to put too much emphasis on one month’s reading. But the details of today’s trade report were a bit disappointing. And we are mindful that global growth deceleration alongside unresolved US-China trade tensions have left risks to the Canadian external sector – and the export-intensive manufacturing sector – tilted on the downside.
