Canadian Merchandise Trade (September 2024)

Canadian trade posts seventh consecutive deficit

• Canada’s merchandise trade balance tallied a $1.3 billion deficit in September, registering in the red ink for the seventh consecutive month. 
• Merchandise exports nudged lower by 0.1% month-on-month (m/m) in September, continuing the decline from the past two months. Decreases were narrowly-based as only 5 of 11 subsectors fell. Lower prices caused most of the nominal export drawdown, with exports of non-metallic and mineral products down 5.4% m/m in September and exports of energy products down 2.6% m/m. Exports of aircrafts (10.3% m/m) and pulp and paper (12.2% m/m) offered an offset.
• Total merchandise imports also pulled back, by 0.4% m/m in September, with 8 of 11 product sectors posting decreases. Imports of metal and non-metallic mineral products (-12.7% m/m) reversed last months gain, while a sizeable increase in energy products (13.6% m/m) offset some of the total import decline.
• In volume terms, merchandise exports rose by 1.4% m/m and imports were relatively flat.
• Canada's merchandise trade surplus with the United States widened to $8.3 billion in August from $7.8 billion the month prior.

Key Implications

• Stripping out the effects of lower prices, Canada saw decent growth on the export side of the ledger in September. Including the companion trade-in-services release, net trade will likely be a tailwind for third quarter growth. The caveat is that Statistics Canada noted that September's data uses more estimation given a new digital initiative being undertaken. This means it likely subject to heightened revision risk.
• Still, economic momentum in the broader economy is showing signs of cooling. Trade volumes for both imports and exports have effectively flatlined for the year, suggesting that global and domestic demand are showing signs of strain. All told, this quarter's trade data aligns with the Bank of Canada's downwardly revised GDP growth projection of around trend-growth.          

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