Canada’s trade deficit narrows in December, share of exports to US shrinks further

Canada's international merchandise trade deficit narrowed in December as exports grew faster than imports, and its share of exports to the United States dropped to its lowest level on record, barring the COVID-19 months, data showed on Thursday.

Statistics Canada said the country posted a C$1.31 billion ($957 million) deficit in December, led by metals and non-metallic mineral exports. This was in contrast to a revised C$2.59 billion deficit in November.

Economists had expected around C$2 billion deficit for December.

Total exports rose 2.6% to C$65.63 billion, driven primarily by metals and non-metallic mineral products shipments that grew by 18% in December. Exports of unwrought gold took the lead in this category with a jump of over 37%, helped by higher prices.

However, excluding the metals and non-metallic category, the Canadian exports edged down 0.2%. In volume terms, total exports were up 1.4%, the statistics agency said.

Imports increased 0.6% to C$66.93 billion, with six out of 11 product sections registering a rise. The increase was driven by imports of gold, passenger vehicles and energy products.

TRADE WITH THE U.S.

Exports to the United States, Canada's largest trading partner, rose 1.1%, accounting for just over 67.4% of total exports, compared with 76.2% a year ago.

This was the first time in three months that outbound shipments to the south increased in percentage terms, but the share of exports to the U.S. shrank to its lowest level since data collection began, except for two months of the pandemic in 2020.

The share of exports to the U.S. was 68.4% in November and 67.5% in October.

Imports from the U.S., however, rose faster by 3.5%, narrowing Canada's merchandise trade surplus with its southern neighbor to C$5.7 billion from C$6.5 billion in November.

Meanwhile, exports to countries other than the U.S. continued their upward momentum, reaching an all-time high in December. Exports of gold to the United Kingdom led most of the gains.

Imports from countries other than the United States fell 3% in December, and Canada's trade deficit with countries other than the United States narrowed to $7 billion in December from $9 billion in November, StatsCan said.

The Canadian dollar was slightly firm and was trading up 0.03% at 1.3690 to the U.S. dollar, or 73.05 cents. Yields on the two-year government bonds were up 0.9 basis points at 2.236%.

(Reporting by Promit Mukherjee; Editing by Dale Smith and Anil D'Silva)