Merchandise Trade Analysis - September 2017

Exports remain weak in September

September was another disappointing month for Canadian exports, as a sharp drop in motor vehicles shipments kept overall growth flat. Total exports for September were valued at $43.6 billion, down slightly from a revised $43.7 billion in August. After rising more or less steadily for a full year, exports have tumbled since May, dropping by 10.5 per cent over the last four months.

The story has been much the same on the import side. After reaching $49.8 billion in May, imports have since fallen by 6.2 per cent, including a modest 0.3 per cent decline in September. With monthly imports of $46.7 billion, Canada's trade deficit was effectively unchanged from August, at $3.2 billion.

On the bright side, the flat export performance was the result of price effects. Export volumes were up by 0.3 per cent compared to August, but the price of those goods fell by about 0.4 per cent. Prices were lower for a wide range of export products, including raw metals and minerals, industrial machinery, motor vehicles and consumer goods.

Price effects dampened import growth as well in September. While the volume of foreign goods bought by Canadians was up by 1.3 per cent, prices for those goods were down 2.0 per cent. The decline in import prices was also spread across a range of product types, but was most pronounced for crude oil.

At the industry level, exports were actually higher for most product types, but those gains were wiped out by a sharp drop in motor vehicles and parts deliveries, which fell by 10.6 per cent in September. There were also smaller declines in exports of consumer goods and agriculture products. Meanwhile, there was a spike in energy product exports in September, driven by crude oil deliveries which rose by 9.5 per cent compared to August.

Looking at major destinations, exports to the United States fell by 1.2 per cent ($391 million) as gains in crude oil exports were not quite enough offset declines in motor vehicles and parts. Exports to many of Canada's other major destinations were down sharply, including to Japan (down 13.3 per cent), South Korea (9.0 per cent), Mexico (5.2 per cent), and the continental EU (4.8 per cent).

Meanwhile, exports to China jumped by 12.8 per cent compared to August, and there were higher sales to many of Canada's smaller export markets. In particular, there was a surge in exports to Algeria and Brazil, with stronger sales in Indonesia and Norway as well.

In terms of imports into Canada, purchases of foreign goods were down across the entire range of product types, with two exceptions: energy; and raw metals and minerals. Led by crude oil, energy imports spiked by 18.5 per cent compared to August, driven by higher deliveries coming in from Saudi Arabia. Metal and mineral ore imports, meanwhile, were up 7.2 per cent, with gains distributed across a range of product types.

Aside from Saudi Arabia, Canadians also purchased more goods from the United States (up $112 million compared to August) and Singapore (up $91.5 million). Meanwhile, there was a decline in imports from Switzerland ($200 million), the EU ($182 million) and Japan ($116 million).