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Canada’s trade deficit shrinks

There is less here than meets the eye, unfortunately!  Canada's merchandise exports rose 3.1% to $33.8 billion in October, on the strength of industrial goods and materials, as exports of precious metals and copper ores reached record highs.  Exports of agricultural and fishing products as well as automotive products grew in October. In contrast, declines were recorded in exports of machinery and equipment and energy products.  Oil exports continue to grow, but natural gas shrank.



The end result is that exports rose by 3% while import only grew by 1.2% (volume was up 1.7% but prices declined by 0.5% -- which speaks volume about the “inflation risk” in the U.S.).  So Canada’s October trade deficit narrowed to $1.7billion from $2.3 billion in September.  One sector which saw tremendous growth is the automobile parts business, which saw a 3.5% increase in October, but this is after an 11% decline in September… these numbers have to be taken into perspective.  Moreover, this segment of the export market has nothing to do with “Canada’s performance” the auto segment in North American is 100% integrated, the driver here is entirely driven by America’s demand for new automobiles.



In terms of overall trade flows the interesting aspect is that the Canada /USA trade is moving swiftly towards balance (which should eventually help in the event of anti-trade legislation in Congress – It is harder to invoke “unfair trade” when the flows are roughly balanced…), Canada’s trade surplus with the U.S. has shrunk from $1.4 billion in September to $1.1 billion in October.

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