Canadian trade balance surplus weakens as energy exports decrease

Canada’s merchandise trade balance remained in a surplus position in June, settling at $136 million after posting a $556 million surplus in May, according to Statistics Canada.

The federal agency reported Friday that the narrow surplus in June represented 0.1 per cent of total monthly merchandise trade and is within the typical margins for revisions to the trade balance in subsequent months.

Royce Mendes, an economist with CIBC Economics
Royce Mendes
CIBC Economics

Royce Mendes, an economist with CIBC Economics, said the StatsCan report is a weak start to June’s monthly data releases.

Canada’s exports were down 5.1 per cent in June, while imports fell 4.3 per cent, both due in part to significant decreases in crude oil, as well as aircraft and other transportation equipment and parts, it said.

Total exports decreased to $50.3 billion, more than offsetting the strong gain observed in May. There were widespread decreases throughout the product sections, with 10 of 11 sections posting declines. Export prices (-3.6 per cent) played an important role in the decrease this month. Year over year, total exports were down 0.9 per cent. In June, non-energy exports fell 4.4 per cent, added StatsCan.

It said exports of energy products decreased 7.4 per cent in June to $10 billion. 

“Exports of crude oil were down 8.6 per cent, the first monthly decrease in 2019. Exports of crude oil have more than doubled since the low observed in December 2018, largely because of higher crude oil prices. In June, crude oil export prices fell 13.5 per cent, while volumes rose 5.6 per cent,” explained Statistics Canada.

Total imports were down 4.3 per cent in June to $50.2 billion, the lowest level since November 2018. Decreases were observed in nine of 11 sections, while modest increases were observed in the other two sections. In real (or volume) terms, imports decreased 3.6 per cent. Year over year, total nominal imports were down 2.7 per cent in June, the first annual decrease since September 2017, said the federal agency.

“Imports of energy products, down 14.8 per cent to $2.7 billion, also contributed to the overall decline in June. Crude oil imports (-27.9 per cent) were largely responsible for the decrease, mainly on lower shipments coming from the United States and Saudi Arabia.”

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