Canada’s goods trade surplus widened to $5-billion in June, the largest since 2008, driven by rising oil shipments to the United States.
Goods exports increased 2 per cent in June to $69.9-billion, Statistics Canada said Thursday. That outpaced the 1.7-per-cent growth in imports to produce the sixth consecutive monthly merchandise trade surplus – the first half-year run of surpluses since 2013.
Energy exports led the way, rising 3.2 per cent to $21-billion. While Canada’s energy producers have benefited greatly from soaring oil prices this year, the increase in energy exports in June was largely the result of higher volumes being shipped across the border.
“Unlike previous months in 2022, it’s not just an energy price story this time,” Randall Bartlett, senior director of Canadian economics at Desjardins, wrote in a note to clients. “Indeed, with energy prices falling sharply in June on concerns of an impending global recession, the trade surplus can largely be chalked up to stronger export volumes.”
Statscan revised its May trade data to show a $4.8-billion merchandise trade surplus that month, instead of the previously reported $5.3-billion surplus.
In June, the value of exports rose in eight of 11 product categories, with notable increases in metal and consumer goods shipments. This was the result of rising gold shipments to the United Kingdom and higher pharmaceutical exports to the U.S., Australia and the Netherlands related to COVID-19 medications.
The value of lumber and building material exports, by contrast, fell 13 per cent in June, largely due to lower prices.
“The decline in lumber prices is in large part the result of a decrease in demand from the construction industry in the United States, where housing starts in May posted their most severe decline in over two years,” Statscan said.
The value of imports into Canada rose by 1.7 per cent in June, also driven by energy products, including gasoline, crude oil and natural gas. Imports of automobiles and car parts, by contrast, dropped 6.8 per cent, with Statscan pointing to fewer car shipments from Germany and South Korea.
“Global motor vehicle production continues to be affected by supply chain issues, resulting in stronger monthly variations in the trade of these goods,” Statscan said.
As for trade in services, imports continue to outpace exports, resulting in a $1.3-billion trade deficit in June, up from $1.1-billion in May. With tourism rebounding, exports of Canadian travel services rose 2.1 per cent in June. But this was offset by a 5.6-per-cent increase in travel service imports – a result of Canadians vacationing abroad.
Combining trade in goods and services, Canada’s surplus with the world was $3.8-billion in June, up from $3.7-billion in May.
Stephen Brown, senior Canada economist with Capital Economics, cautioned that trade surpluses will likely narrow going forward.
“Export volumes outpaced import volumes in June but, with the survey-based export indices falling back, the outlook is growing more challenging,” Mr. Brown wrote in a note to clients. “Together with the declines in commodity prices since June, it seems likely that the trade surplus will narrow over the summer.”
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Mark Rendell