Canada's trade surplus widens in November
- Canada recorded an increase in its merchandise trade surplus to $3.1 billion in November, up from a $2.3 billion surplus in October. Merchandise exports increased at a solid, 3.8% pace (month/month), and imports were up by a lesser 2.4%. In real terms, the picture was still strong, with export volumes up 3.5%, and import volumes up 0.8%.
- The increase in exports was broad-based, spanning 8 of the 11 industries. Exports of consumer goods (+9%) contributed the most to the headline increase, driven by a surge in exports of pharmaceutical products. Statistics Canada highlighted that COVID-19-related medications were imported for packing/labelling in Canada, then exported during the same month. Exports of basic and industrial chemical, plastic, and rubber products (+14.7%), energy products (+2.8%), motor vehicles and parts (+4%), and forestry products and building and packaging materials (+6.7%) were also strong.
- Imports were up in 6 of the 11 industries. Similar to exports, a 5.2% increase in imports of consumer goods (led by pharmaceutical products) drove the headline increase. Imports of metal and non-metallic mineral products (+7.3%) and basic and industrial, chemical, plastic and rubber products (+7.3%) were also strong.
- The B.C. floods were cited in November's international trade report. The impacts were centered in B.C. Exports in the province (on a non-seasonally adjusted basis) declined 7.8%, but the decline was more than offset by an 11% increase in exports in other provinces.
- In a separate release, Statistics Canada revealed that services exports were up 2.9% (month/month), whereas imports were up a more modest 0.3%.
Key Implications
- Canada's exports and overall trade flows remained resilient in November, despite the disruptions stemming from the devastating floods in British Columbia. Even after controlling for the atypical spike in pharmaceutical products, nominal exports would have remained on a solid footing during the month (+2.8%).
- Looking ahead, we are likely to see some volatility in international trade in the coming months. Continued strength in manufacturing sentiment south of the border, alongside robust commodity prices and demand, bode well for exports. However, the global omicron wave may prolong supply chain pressures during the first quarter this year as consumers reorient spending back towards goods. In addition, concerns relating to labour shortages (partly due to a potential increase in employees requiring isolation) may present another bottleneck in the near-term for international trade.
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