On Friday, StatsCan published the merchandise trade numbers for December 2011 -- and despite a strong dollar, Canadian exports did very well indeed! Canada generated a $2.7 billion trade surplus for the month, imports rose, but exports "exploded upward", in numbers imports rose 0.8% but export rose 4.9%.
The big winner was equipment and machinery and the auto sector. Will this continue? Hard to say, because the US economy, which is Canada's export market prime driver seems to be in recovery mode. On bit of statistics that worries this writer is U.S. gasoline consumption; which is now lower than in 1980 -- 32 years ago. BTW this not driven by a reduction in inventory, gasoline is a just in time business, no one keeps stocks, because it doesn't keep.
The problem is that historically, gasoline sales have been highly correlated with economic growth (or the lack thereof), and so this could be a important marker. For Canada, the risk of a downturn in America is crucial to its export business (70% of all merchandise exports are to the US). Bottom line, since July 2011, Canada's exports have been doing very well, a reflection of the US recovery. But there are worrying signs out there