A shipping container is unloaded at the Port of Montreal, on May 17, 2021.Christinne Muschi/Reuters
Canada posted a higher than expected trade deficit of $1.26-billion in September as a drop in imports failed to offset a fall in exports, data showed on Tuesday.
The September data was its seventh straight monthly trade deficit, primarily led by lower exports to major trading countries other than its biggest trading partner the United States, Statistics Canada said.
Due to an ongoing digital transition at Canada Border Services Agency Assessment and Revenue Management, from where Statscan gets most of its trade data, results for September include greater use of estimation.
Analysts polled by Reuters had predicted a deficit of $800-million and Statscan revised sharply the August trade deficit to $1.47-billion from $1.1-billion.
The biggest hit to exports, which fell by 0.1 per cent, came from a 5.4 per cent drop in shipments of metal and non-metallic mineral products, led by a 15.4 per cent slump in the unwrought gold category.
Lower prices of metals and energy products were behind the monthly decrease in exports with the total exported goods prices dropping 1.5 per cent, Statscan said, adding that in volume terms exports rose 1.4 per cent.
Inbound shipments declined 0.4 per cent in September but were largely flat in volume terms. Imports of metal and non-metallic mineral products decreased 12.7 per cent and contributed the most to the overall decline.
The drop in imports largely reflect Canada’s weak demand environment and sluggish growth prospects which have taken a hit under the impact of a 23-year high interest rate before the Bank of Canada started reducing it from June.
Since then, the BoC has cut its key policy rate at its four consecutive meetings to 3.75 per cent.
The BoC will announce its next monetary policy decision on Dec. 11 with money markets bets showing a 47 per cent chance of a 50-basis point cut.
The Canadian dollar firmed by 0.18 per cent to 1.3876 to the U.S. dollar by 1333 GMT, or 72.07 U.S. cents. Yields on two-year government bonds were up 2.89 bps at 3.134 per cent.
Total exports were at $63.88-billion while imports were at $65.14-billion.
Canada’s trade surplus with the United States, which accounts for over three-quarters of its total exports, increased to $8.29-billion in September from $7.82-billion a month ago. Imports from the United States, which is 60 per cent of all Canadian imports, rose 0.8 per cent month-on-month.