Canadian merchandise exports fell 2.9% to $65.4 billion in August, while merchandise imports declined 1.7% to $63.9 billion, both down for the second month in a row, according to Statistics Canada data.
The story was also discouraging after removing price effects. In volume terms, real exports and real imports were down 1.3% and 0.7%, respectively, according to analysis provided by Alan Arcand, chief economist with Canadian Manufacturers & Exporters.
Arcand says the shrinking of both exports and imports “was not a huge surprise given that the global economy has been slowing down and commodity prices have been moving lower.” With oil prices stabilizing and Canadian farmers on track to produce a better crop this year, commodity exports could see some growth over the near term. Manufacturing exports, however, will struggle to make gains, given the weak global economic backdrop and ongoing challenges including labour shortages and supply chain disruptions, Arcand says.
The decrease in nominal exports spanned 7 of 11 product categories, many of them critical to Canadian metalworking shops. Exports of motor vehicles and parts fell 3.7% to $6.8 billion in August, down for the second time in three months, as the sector continues to feel the effects of input shortages. While exports increased in four product categories in August, the gains were modest. Exports of aircraft and other transportation, equipment and parts grew the most, up 4.8% to $2.1 billion. This was its third increase in four months.
Canada’s merchandise trade surplus narrowed from $2.4 billion in July to $1.5 billion in August, the lowest monthly surplus this year.
“Breaking these data down, our trade surplus with the U.S. remained unchanged at $10.7 billion, while our trade deficit with the rest of the world widened from $8.3 billion in July to $9.2 billion in August,” Arcand said.