Shipping containers at the Port of Montreal, on April 25, 2021.Graham Hughes/The Canadian Press
Canada’s trade surplus narrowed to $1.57-billion in November from October, data showed on Tuesday, as precious metals led the first decline in exports in five months.
The surplus was lower than a $2-billion median forecast of analysts polled by Reuters. October’s surplus was upwardly revised to $3.20-billion from a previously reported $2.97-billion, Statistics Canada said.
“I’d call this a flat result after some positive months,” said Stuart Bergman, chief economist at Export Development Canada. Total exports fell 0.6 per cent, while imports were up 1.9 per cent. Overall it was the fourth consecutive monthly surplus.
“On a macro level, we see slower growth in the first half of 2024 and then things starting to pick up in the second half of the year and into 2025,” Bergman said.
The Bank of Canada said last month that labor market pressures had eased and growth stalled during the middle part of last year, leaving the economy no longer in excess demand.
Economic growth was flat in October, and Statscan has said gross domestic product likely rose 0.1 per cent in November. The BoC has said the slowdown, which is expected to continue in 2024, is a sign that its monetary policy is working.
The bank’s next rate announcement is on Jan. 24, when it is expected to keep its key policy rate at a 22-year high of 5 per cent. Money markets and economists expect the bank to start cutting rates in the first half of 2024.
The Canadian dollar was trading 0.3 per cent lower at 1.3380 to the greenback, or 74.74 U.S. cents.
The decline in exports – the first since June – was mainly due to lower exports of unwrought gold, silver, and platinum group metals in the banking sector as well as exports of aircraft and other transportation equipment and parts.
Bergman said the decline in precious metals was likely due to a decrease in bank demand in Europe due to unrest in the Middle East.
By volume, exports were down 0.1 per cent.
“Canada’s trade balance should swing back into deficit territory as auto imports normalize following US strike impacts, while demand for Canadian exports will be limited by high interest rates globally,” said Katherine Judge, an economist at CIBC Economics.
Energy products and industrial machinery were the main drivers of import growth.
Under the energy segment, imports of nuclear fuel and other energy products increased the most, mainly on higher imports of uranium from Kazakhstan, Statscan said.
Imports of refined petroleum energy products also increased, due to higher imports of motor gasoline and aviation fuel from the United States, coinciding with outages reported in Canadian refineries in autumn. By volume, total imports were up 1.6 per cent.