Canadian trade surplus jumped in August, powered by Energy

Canada’s trade surplus with the rest of the world expanded significantly in August on larger energy exports.

The country’s merchandise trade surplus was C$1.94 billion ($1.5 billion) from a revised C$736 million surplus in July, Statistics Canada reported Tuesday in Ottawa. Economists were expecting a surplus of C$430 million, according to the median estimate in a Bloomberg survey. 

August was the third consecutive month in which Canada’s trade balance was in surplus. Exports rose 0.8%, with energy products rising the most, and imports fell 1.4%. 

“Canada’s trade balance and export backdrop showed resilience in August despite lingering supply chain headwinds,” Omar Abdelrahman, an economist at Toronto-Dominion Bank, said in a report to investors. “Commodity exports drove the gain, which more than offset the decline in motor vehicles and parts exports.” 

The trade report shows the extent to which exports have recovered in Canada, with more shipments of energy products and metals as international demand returned. However, risks to future growth remain, with supply chain bottlenecks hampering the manufacturing of goods amid a fourth wave of Covid-19 cases. The agency said logistical bottlenecks were still affecting the automotive sector, with auto exports and imports down on the month.

In volume terms, exports rose 2.3% and imports fell 3.2%. Shipments abroad of coal, natural gas and crude oil increased, along with metal products. In addition to autos, aircraft and other transportation equipment were a drag on imports.

Canada’s currency was little changed on the report, trading at $1.2589 per U.S. dollar at 9:32 in Toronto.

“The increases in energy and six of the 11 categories of exports is good news, but that’s barely half of the categories and a lot of the widening in surplus is the result of a fall in imports, which is not good news because it reflects these global production issues,” Royce Mendes, an economist at Canadian Imperial Bank of Commerce, said by phone.