Canadian Merchandise Trade (April 2024)

Canada's Trade Accounts Register a $1.0 Billion Deficit in April

• Canada’s merchandise trade deficit tightened to $1.0 billion deficit in April, while March's deficit was revised lower to $2.0 billion. 
• Exports rose by 2.6% in April, partially reversing last month's hefty decrease. The contribution to the increase was broad-based, with 8 of 11 sectors registering gains. Exports of energy products contributed most to the improvement (+2.7% month-on-month, m/m) with healthy levels of both natural gas and crude oil exports. Exports of metal and non-metallic minerals (+4.7% m/m) and aircrafts & other transportation (+8.6% m/m) provided an assist.
• Meanwhile, total imports in April also rose (1.1% m/m) with 6 of 11 product sectors seeing an increase. Motor vehicles and parts imports made the biggest weighted contribution (+4.2% m/m), registering a third consecutive monthly gain. Imports of aircrafts and other transportation equipment posted a 23.7% m/m increase after a big decline last month. Declines in energy products (-6.9% m/m) and consumer goods (-1.5% m/m) weighed on the overall reading.
• In volume terms, imports edged lower by 0.2% in April while export volumes were up by 1.7%. 
• Canada's trade surplus with the United States widened from $6.9 billion in March to $7.3 billion in April.

Key Implications

• Recently released GDP data for Q1-2024 showed net trade as a slight tailwind to growth. While it is still early in the quarter, we expect trade to contribute to second quarter growth given export volumes' comparative strength to imports in April. The official startup of the Trans Mountain Pipeline last month will also significantly bolster energy exports in the upcoming months.
• The Canadian consumer showed surprising resilience in the first quarter, partially explaining the quarterly gain in imports over the first three months of the year. April's data pours a bit of cold water on the prospects of a sustained upturn in domestic demand as import volumes took a step back. Meanwhile, exports have been in a holding pattern for many months, showing stable conditions with major trading partners.           

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