Canadian Merchandise Trade (July 2024)

Canada's trade position registers surplus in July

• Canada’s merchandise trade balance tallied a $684 million surplus July. This comes after last months surplus was revised to a $179 million deficit. 
• Merchandise exports gave back some of June's hefty increase, falling 0.4% month-on-month (m/m) in July. Decreases were relatively broadly-based with 6 of 11 subsectors registering declines. Motor vehicles and parts fell by 5.4% m/m, the biggest contributor to the monthly decrease.  Exports of metal ores and non-metallic minerals (7.8% m/m), consumer goods (3.1% m/m) and energy products (1.2% m/m) helped temper the decline.
• Total merchandise imports also fell in July, but by a larger amount (-1.7% m/m). Like exports, imports of motor vehicles and parts contributed most to declining total imports (-10.8% m/m), reversing gains from record highs in June. Imports of aircraft and other transportation equipment (-17.2% m/m) also declined in July. Metal ores and non-metallic minerals/mineral product imports partially offset the overall decrease.
• In volume terms, merchandise exports and imports fell by 1.5% and 2.0% m/m, respectively. 
• Canada's merchandise trade surplus with the United States widened for a fourth straight month, up to $11.3 billion in July from $9.0 billion the month prior.

Key Implications

• July's trade data saw both import and export activity moderate and offered up a few key surprises. Firstly, crude oil exports (+2.9% m/m) was driven by higher prices–volumes actually declined modestly on the month. However, we still expect crude shipping via the Trans Mountain Pipeline to be boosted in coming months. Second was the hefty drop in auto exports despite the ramp up in July production, suggesting weakening demand for autos in key export markets last month.
• Including the companion trade-in-services release, net trade is still tracking to add modestly to Q3-2024 Canadian GDP growth. The caveat is that there are two more months of information needed to round out the quarter, and trade data can be also subject to volatile revisions.  With last week's GDP report pointing to slowing economic momentum and today's trade data, risks are tilted to the downside for the Bank of Canada's (BoC) Q3 growth projection of 2.8% quarter-on-quarter (q/q) annualized.          

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