Merchandise Trade Analysis – February 2017

Exports dip in February on lower sales to the US and Asia

After a long string of good economic news, the first blemish of 2017 appeared with the release of February's international trade data. Exports fell by 2.4 per cent compared to January, ending a string of four consecutive monthly gains. The silver lining is that, at $45.3 billion for the month, exports are still well above levels seen through most of 2016 and a full 4.4 per cent higher than they were 12 months earlier.

exports dip in feb chart

While exports were down markedly, the value of imports into Canada rose slightly (by 0.3 per cent), reaching $46.3 billion. As a result, Canada's three-month streak of trade surpluses ended in February, as the trade balance swung from a (revised) surplus of about $420 million in January to a deficit of about $970 million in February.
February's decline in exports was largely the result of fewer goods being sold rather than price effects. On the whole, export volumes fell by 2.5 per cent compared to January, led by lower-volume sales of cleaning products, farm and fishing products, and electricity. A small decline in prices (0.2 per cent) also helped to push the total value of exports lower in February.

Canadian Trade Summary
  Dec-16 Jan-17 Feb-17
Value ($billions)
Exports 46.2 46.5 45.3
Imports 45.8 46.0 46.3
Trade Balance 0.4 0.4 -1.0
       
Percentage change
Export prices 0.8 -0.6 -0.2
Export volumes -1.5 0.8 -2.5
Import prices -0.2 -0.6 -0.2
Import volumes 1.0 3.3 0.3


Meanwhile, Canadians bought more foreign goods in February, aided by the fact that prices for those goods were down slightly. Overall, import volumes were up 0.3 per cent compared to January, while average prices for those goods were 0.2 per cent lower.

export volumes drop in feb chart

Looking at product type, the decline in exports was relatively widespread as seven of the 11 major product groups posted negative growth for the month. On a dollar-value basis, the largest drops were in shipments of farm, fishing and intermediate food products ($325 million), followed by consumer goods ($258 million). There was also a notable decline in exports of aerospace vehicles and parts, which were down by $186 million compared to January. Aerospace exports have now fallen in four consecutive months and are down almost 25 per cent since November.

The one significant bright spot on the export side was in metal and non-metallic mineral products, which were up by $279 million month-over-month. The increase was driven by a recovery in precious metals exports, which were helped along by rising gold prices in February. There were also modest gains in exports of motor vehicles and parts, as well as industrial machinery, that month.

export growth chart

In terms of major destinations, the decline in exports was driven lower sales in three key markets: the United States, China and South Korea. Deliveries to the US and China dropped by more than $415 million each, while shipments to South Korea were $318 million lower. On the positive side, UK-bound exports rose by $225 million. That country is by far Canada's largest export market for gold.

export growth by destination chart

The main story on the import side was an increase in purchases of foreign-made motor vehicles and parts, as well as basic agricultural and food products. Imports of the former were up by $158 million, while deliveries of fruits and vegetables helped drive up the latter by $114 million compared to January. Partially offsetting those increases were declines in imports of aerospace products, as well as metals and non-metallic mineral products.

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