Falling energy exports push Canada trade balance to deficit

Canada’s merchandise trade balance unexpectedly recorded its second deficit of 2022 in November, in large part due to broad declines in energy exports.

The country posted a C$41 million ($30.3 million) deficit from a downwardly revised C$130 million surplus in October, Statistics Canada reported Thursday in Ottawa. Economists were anticipating exports to exceed imports by C$500 million in November.

The small deficit is within the typical range for monthly revisions to imports and exports, and merchandise trade was essentially in balance in November, the statistics agency said. Shipments of energy products abroad fell 4.7% on the month, the fifth straight monthly decline, though still represented a quarter of exports.

Total exports decreased 2.3% in November, while total imports dipped 2.1%, partly on lower shipments of consumer goods. Stripping away the impact of prices, Canada exports dropped 1.4%, while imports fell 0.7%, a third consecutive monthly decrease.

Data suggest that the era of recurring trade surpluses for Canada may be ending. The surge in energy prices early last year had helped boost the nation’s exports as well as its gross domestic product growth in the third quarter. From January to November last year, Canada has seen nine surpluses.

Slowing imports of consumer goods may also suggest waning momentum in the domestic economy, as rapid increases in interest rates begin to hit households and businesses.

Imports of miscellaneous goods and supplies decreased 9.6% in November, partly because of lower shipments of toys and games. Before November, imports of those products had been generally strong throughout 2022.