Merchandise Trade Analysis – March 2017

Exports bounce back in March

Canadian exports rebounded smartly in March, as widespread gains propelled foreign sales to record levels.  A relatively large decline in February (2.5 per cent) was countered by an even larger increase in March (3.8 per cent), driving total exports to a new all-time monthly high of $47.0 billion.

Imports into Canada were also higher, rising by 1.7 per cent to just over $47.1 billion. With exports growing at more than twice the rate of imports, Canada’s net trade flows were effectively in balance in March, as a trade deficit of $1.1 billion in February shrank to just $135 million. 

Exports had been a drag on the Canadian economy through most of 2016, but strong numbers since November have generated considerable momentum early on in 2017. On a year-over-year basis, exports are tracking 12.9 per cent higher than at the same point last year. Double-digit growth is likely to continue through the spring and into the summer.

The increase in exports in March was driven by a combination of price and volume effects. Led by a recovery in crude oil deliveries, export volumes were up by 2.5 per cent compared to February. Meanwhile, exporters in a wide range of industries received better value for their goods, driving overall export prices up 2.4 per cent. On the import side, growth in March was driven entirely by price effects. Import prices rose by 1.8 per cent compared to February, while the volume of goods imported into Canada fell slightly (by 0.3 per cent).

An ongoing recovery in the energy sector was a major contributor to Canada’s strong export showing in March. Exports of energy products were up 7.0 per cent compared to February. While crude oil volumes were up, the largest percentage gains were in deliveries of natural gas and electricity.  

While energy exports played an important role, there was plenty of good news to spread around. Of the eleven major export product categories, eight were higher in March, with only motor vehicles and parts, and raw metals and minerals posting noteworthy declines. Led by meat, seafood and other food products, consumer goods exports were up 6.9 per cent, while aerospace exports jumped by 8.6 per cent, recovering about half of their decline in February.

Most of Canada’s export growth in March was to non-US destinations. In particular, exports to China were up by $304 million, while shipments to South Korea were $230 million higher. Those two countries accounted for about 31 per cent of Canada’s export gains for the month. There were also notable gains in exports to India and the EU.

On the import side, growth in March was largely driven by a recovery in metal and mineral products, which were up 10.4 per cent compared to February. Imports of industrial machinery (up 4.1 per cent) and motor vehicles (1.5 per cent) were also higher, while energy imports were down sharply (a 9.3 per cent decline). 

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