Canada’s trade surplus unexpectedly narrows as imports surge

Canada’s economy recorded a surge in trade with the rest of the world in March, as rising prices for commodities coupled with strong domestic demand and a smoother global supply chain drove both imports and exports.

Imports jumped 7.7% in March to C$61.1 billion ($47.7 billion), while exports were up 6.3% to C$63.6 billion, Statistics Canada reported on Wednesday. The nation’s surplus narrowed to C$2.5 billion, from a revised C$3.1 billion in February.

Economists were anticipating the surplus would widen to C$3.9 billion in March, from C$2.7 billion initially reported in February.

Key Insights

• The surge in oil prices over the past year has helped the nation swing into recurring surpluses for the first time since 2014, though Wednesday’s report presents a mixed picture for the Canadian economy
• The data suggest that some of the bottlenecks plaguing the trade sector eased in March, at least temporarily. The surge in imports also suggests strong demand in Canada for goods—a sign of a healthy economy
• At the same time, Canadians are turning to foreign goods to meet that demand rather than from a home economy that has been fast running up against capacity. That could weigh on growth numbers. This is reflected in trade volumes. While the export increase was largely price driven, the higher imports rose on the back of higher volumes.