Canada’s merchandise trade deficit with the world narrowed from $1.2 billion in November to $370 million in December, according to a report released Wednesday by Statistics Canada.
The federal agency said merchandise exports rose 1.9 per cent in December, mostly on higher crude oil exports, while imports edged up 0.2 per cent.
Total exports for 2019 rose 1.7 per cent, a slowdown from the gains in 2018 (+6.3 per cent) and 2017 (+5.4 per cent). Compared with the previous year, total imports were up 1.0 per cent in 2019, also a deceleration from 2018 (+5.7 per cent) and 2017 (+4.9 per cent). The trade deficit totalled $18.3 billion in 2019, the smallest deficit since 2014, when the last annual surplus was observed, added StatsCan.
“Exports of energy products (+9.5 per cent) posted the largest monthly gain in December, led by higher crude oil exports (+18.0 per cent). In November, crude oil exports fell, primarily because of a rupture of the Keystone pipeline in North Dakota. As the situation was resolved before the end of November, crude oil exports rebounded strongly in December. Excluding energy products, exports edged up 0.3 per cent,” said the federal agency, adding that exports to the United States rose 2.9 per cent in December, mainly due to crude oil exports.
“This is a solid trade report to conclude a generally soft Q4. The narrower deficit was welcome news, but the sharp pullback in oil prices suggests we’ll see a wider gap in the coming months with the weaker C$ providing a bit of offset. We’ll see if the December activity data reflect the improvement in trade activity,” wrote Benjamin Reitzes, Director, Cdn Rates & Macro Strategist for BMO Capital Markets, in a commentary note.
“Even with the slightly slimmer than expected headline print, today’s trade data will do little to inspire confidence in the underlying trend within the Canadian economy,” wrote Andrew Grantham, an economist with CIBC Economics, in a commentary note. “The lack of progress in non-energy exports, even with the expected boost from the rail strike ending, is a somewhat disappointing first signal for December GDP. However, continued softness in consumer spending and/or a rise in the unemployment rate will be more important when it comes down to whether the Bank of Canada will respond to slower growth with an interest rate cut in April, as we anticipate.”
Mario Toneguzzi is a business reporter in Calgary.
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