Canada’s goods-trade surplus with the rest of the world expanded more than expected in September, reaching its highest level in 15 months. The surge was driven by increased exports, primarily fueled by crude oil.
According to Statistics Canada, the country recorded a merchandise-trade surplus of 2.04 billion Canadian dollars (CAD), equivalent to approximately $1.49 billion USD. This surpassed market expectations of a surplus of CAD 950 million.
August’s surplus, which marked the first since April, was also revised upward by CAD 231 million to $949 million.
Exports of merchandise experienced a third consecutive month of growth, rising by 2.7% to CAD 67.03 billion, the highest level since June 2022. The increase was largely driven by higher prices, as volume-based exports only inched up by 0.4%.
Energy product exports played a significant role in this surge, surging by 10.6% in September and accounting for over a quarter of the country’s total exports, the highest share since October last year. Crude oil exports were the main driver behind this increase, supported by higher prices following the extension of voluntary production cuts by the Organization of Petroleum Exporting Countries (OPEC) and its partners.
Imports, on the other hand, increased by 1% to CAD 64.99 billion in September, building on the previous month’s rise and partially offsetting the decline experienced in July due to labor strikes at Canadian ports. Imports of motor vehicles and parts continued to rise for the sixth consecutive month, driven by shipments from Mexico. Despite disruptions caused by auto-industry strikes, imports from the United States remained relatively stable, according to the data agency.
Imports in volume terms saw a 1.7% increase in September.
Canada’s Export Performance
Canada’s export performance remains strong, with a significant increase in exports to the United States, its largest export market. In September, exports to the U.S. rose by 2.6%, while imports increased by 1.7%. This resulted in a surplus of C$11.66 billion, the largest since mid-2022, compared to C$11.01 billion the previous month.
In addition to the U.S., Canada also experienced a growth in exports to countries other than its southern neighbor. Exports to these countries increased by 2.7% in September. On the imports side, purchases from abroad saw a slight decrease of 0.2%. As a result, Canada’s merchandise trade deficit with countries other than the U.S. narrowed to approximately C$9.6 billion, compared to C$10.1 billion in the previous month.
Incorporating Goods and Services
When considering both goods and services, Canadian exports showed a 2.2% increase, while imports rose by 0.8%. This positive performance led to a trade surplus of C$462 million, a remarkable improvement from the deficit of C$633 million registered in August.
However, it is worth noting that Canada’s overall economic output has faced challenges in recent months. Higher borrowing costs, labor strikes, and forest fires have contributed to a significant cooling of economic activity. Advanced information suggests that the economy remained relatively stagnant in September, following an unchanged GDP in August.
Despite these challenges, certain sectors like construction and the public sector have shown increases in output. These positive developments have been counterbalanced by decreases in utilities and mining, quarrying, and oil and gas extraction.
It remains crucial for Canada to navigate these challenges effectively and identify opportunities for growth and diversification.