Canada’s trade deficit fell to $3B in April: StatsCan

BMO economist says loonie may need to weaken further to narrow trade gap if US growth doesn't materialize.

June 4, 2015
by The Canadian Press

OTTAWA — Canada’s trade deficit narrowed to $3 billion in April as imports fell faster than exports for the month Statistics Canada said.

The April deficit was much bigger than the $2.1-billion deficit that economists had estimated, according to Thomson Reuters, but it was an improvement over the previous month.

Statistics Canada revised its estimate for March to show a record deficit of $3.9 billion, compared with an initial reading of $3 billion.

BMO Capital Markets senior economist Benjamin Reitzes noted Canada’s trade position improved in April, but added the size of the deficit was concerning.

“On the bright side, there should be some improvement over the coming months, with oil prices rising modestly and US demand expected to improve,” Reitzes said.

“But if that US strength doesn’t materialize, these numbers might be suggesting that the loonie needs to weaken even further to narrow Canada’s trade deficit.”

The disappointing April trade data follows a report by Statistics Canada last week that the Canadian economy contracted at an annual pace of 0.6%t in the first quarter compared with the Bank of Canada’s prediction of no change for the first three months of the year.

TD Bank economist Brian DePratto said the April trade data provided an early indication of how the second quarter of the year may shape up.

“Today’s release suggests that while trade is likely to make a positive contribution to growth in the second quarter, it is unlikely that we will see a return to strong growth,” he wrote in a note to clients.

DePratto said economic growth was currently tracking in the 0.5 per cent to one per cent range, below the 1.8 per cent predicted by the Bank of Canada in its April monetary policy report for the second quarter.

Statistics Canada said imports in April fell 2.5 per cent to $44.9 billion while volumes fell 1.8 per cent and prices slipped 0.8 per cent.

Imports of consumer goods fell 6.2 per cent to $9.4 billion, while metal and non-metallic mineral products fell 11.3 per cent to $3.7 billion.

Meanwhile, imports of motor vehicles and parts were up 2.7 per cent to a record $8.2 billion and energy products rose 7.4 per cent to $2.9 billion.

On the other side of the equation, exports fell 0.7 per cent at $41.9 billion as volumes increased 0.5 per cent, but prices declined 1.2 per cent.

The drop came as exports of consumer goods fell six per cent to $5 billion, while forestry products and building and packaging materials dropped five per cent to $3.2 billion.

Offsetting these decreases, exports of energy products increased 5.9 per cent to $7.3 billion.

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