Canada: Goods trade likely contributed to growth - NBF

Roman Schwartz
August 6, 2018

Reflecting an increase in imports and a decrease in exports, the Commerce Department released a report on Friday showing the USA trade deficit widened in the month of June.

"The widening in the trade deficit in June, after three consecutive months of narrowing, suggests that some of the transitory factors that drove those trends are starting to fade", Barclays said in a note to clients on Friday.

The goods trade surplus with the US advanced C$0.8bn to C$4.1bn, the highest since April of a year ago.

On Friday, Trump's chief economic advisor Larry Kudlow told Bloomberg TV that the administration will keep pressing China for trade reform after China on Friday announced a list of $60 billion in US goods that will be impacted by a new tariff.

Many economists believe the looming trade dispute with China may also have contributed to an out-of-season surge in US soybean exports in the second quarter that could reverse going forward.

Friday's data provided evidence that USA steel and aluminum tariffs were having such an effect.

Canada's overall imports were down 0.2 per cent in June to $51.3 billion. Economic growth is on track for a 3 per cent annualized pace in the second quarter, and the trade data bolsters the case for another central bank rate increase by October, he said.

Bank of England raises interest rates to 0.75%
The central bank said inflation in two years' time was likely to be 2.09 percent, above the BoE's 2 percent target. Governor Urjit Patel attends a news conference after a monetary policy review in Mumbai , India , August 1, 2018.

Canada's merchandise trade deficit narrowed more than forecast as oil producers and aircraft makers led exports to a record high. The Bank of Canada is counting on trade and investment to contribute more to an economic expansion as it raises interest rates, while saying protectionism remains the biggest risk.

"Canadian trade was a large and pleasant surprise in June, and a surge in exports for the month capped a solid quarter", Canadian Imperial Bank of Commerce chief economist Avery Shenfeld wrote in a research note. They were boosted by imports of consumer goods and crude oil.

Exports of transportation equipment and parts were up 18.9 per cent to a record $2.5 billion, with exports of business jets accounting for much of the increase. Exports of passenger cars and light trucks were up 5 per cent in the month.

A dip in auto exports and rising oil prices in June drove the increase in the gap between USA imports and exports, the Commerce Department reported Friday. Petroleum imports in June were the highest since December 2014. Exports rose 2.5 percent to a new record while imports edged up 0.3 percent.

Imports of energy products decreased 15.1 per cent to $2.9 billion in June compared with May, as Canadian refineries came back on stream following spring maintenance shutdowns.

Imports fell 0.2 percent on lower volumes of energy products.

Other reports by

Discuss This Article

FOLLOW OUR NEWSPAPER