A shipping container is unloaded at the Port of Montreal, on May 17, 2021.CHRISTINNE MUSCHI/Reuters
Canada recorded a larger-than-expected trade surplus of $2.97-billion in October, as exports rose marginally but imports slumped, Statistics Canada said on Wednesday.
Analysts in a Reuters poll had forecast a $1.60-billion surplus. September’s surplus was downwardly revised to $1.1-billion from $2.04-billion initially reported.
Total exports increased 0.1 per cent while imports were down 2.8 per cent.
The decline in imports was led by metal and non-metallic mineral products and motor vehicles and parts, Statscan said. By volume, total imports were down 3.2 per cent.
The motor vehicles and parts category recorded its first monthly decline since March, with imports of passenger cars and light trucks being the largest drag.
“In the context of unstable supply due to strikes by U.S. auto workers in October, a large share of the monthly decline was attributable to lower imports from the United States,” Statscan said.
The slump in imports suggests that firms are now drawing down their inventories as demand weakens, raising the risk that the economy will contract again in the fourth quarter, Stephen Brown, an economist with Capital Economics, said in a note.
Canada’s gross domestic product unexpectedly contracted in the quarter. The Bank of Canada anticipates growth to remain muted until the end of 2024 as high interest rates weigh on the economy.
On Wednesday, the central bank left its key policy rate at a 22-year high of 5 per cent.
On the export side, aircraft and other transportation equipment and parts drove the gains and helped to offset declines in energy products and basic and industrial chemical, plastic and rubber products.
The largest contributor to the aircraft and other transportation category was exports of transportation equipment to Saudi Arabia, Statscan said.
By volume, total exports were down 0.1 per cent.
The shipments to Saudi Arabia also helped increase exports to countries other than the United States by 3.9 per cent.
Trade slowed with the United States – Canada’s biggest trading partner – with both exports and imports recording declines.
“The details in the trade data suggest some slowing momentum in international demand with key trading partners. This will be an important factor to watch over the coming months,” Marc Ercolao, an economist with TD, said in a note.