Canadian trade deficit narrows to $3.3 billion in November

Thursday, 07 January 2021 21:05:12 (GMT+3)   |   San Diego

According to Statistics Canada, in November, Canada's merchandise exports increased 0.5 percent, with gold exports posting the largest increase. Imports edged down 0.3 percent, on lower imports of industrial machinery, equipment and parts. As a result, Canada's merchandise trade deficit with the world narrowed from $3.7 billion in October, to $3.3 billion in November.

Following a number of significant increases and decreases earlier in the year, the rate of change in Canada's trade activity slowed in November, with total trade edging up 0.1 percent. This represented the smallest monthly percentage change in 2020.

Total exports were up 0.5 percent in November to $46.8 billion—$1.5 billion below the pre-COVID-19-pandemic mark set in February. Despite this growth, 7 out of 11 product sections posted declines. Non-energy exports increased 0.2 percent to $39.9 billion, $129 million shy of their February levels. In real (or volume) terms, total exports rose 0.9 percent.

Exports of metal ores and non-metallic minerals (+26.0 percent) also rose significantly in November. Increases in exports of copper ores (+84.6 percent) and iron ores (+26.0 percent) both contributed strongly to the growth in this product section. Despite the pandemic, market conditions (rising prices, strong foreign demand, and supply issues in other countries) have been advantageous for Canadian producers of copper and iron ores in 2020. These factors contributed to an atypical increase in exports of these commodities in November. So far in 2020, exports of both copper and iron ores have already surpassed their 2019 totals.

These increases were offset in part by lower exports of motor vehicles and parts (-4.1 percent). After a 7.2 percent decrease in October, exports of passenger cars and light trucks (-4.0 percent) fell again in November. Exports of engines and parts (-4.4 percent) were also down, coinciding with lower motor vehicle production in the United States.

Total imports decreased 0.3 percent in November to $50.1 billion, which was still above pre-pandemic levels. This was the first decline after five consecutive months of growth. In real (or volume) terms, imports were down 0.7 percent.

Imports of industrial machinery, equipment and parts decreased 3.9 percent in November to $5.3 billion—the second decline in seven months. Since the 21.3 percent decrease in April, imports of industrial machinery and equipment have increased 28.0 percent. The decrease in imports of other general-purpose machinery and equipment (-6.8 percent) contributed the most to the decline this month. In October, high-value shipments of wind turbines from China related to a new wind farm project were observed. These shipments were not repeated in November.

Imports of metal ores and non-metallic minerals decreased 11.0 percent in November. Despite the monthly decline, imports of this product section were already up by 5.9 percent in 2020 compared with the full year of 2019. Both the monthly decrease and annual growth were attributable primarily to imports of other metal ores and concentrates—a category composed largely of gold for refining purposes. This month's decrease in imports of other metal ores and concentrates (-23.2 percent) was mainly the result of lower imports of gold from Peru.

The divergent trend between Canada's trade with the United States versus Canada's trade with other countries continued in November. Total trade with countries other than the United States was up 2.1 percent in November, reaching a record $33.1 billion. Total trade with the United States decreased 1.0 percent to $63.8 billion—the lowest level since June. While total trade with countries other than the United States was up $3.4 billion in November compared with February, total trade with the United States was $4.8 billion below the levels observed that month. A significant part of that gap is the result of lower exports and imports of energy products.

In November, exports to countries other than the United States rose 7.4 percent, a sixth increase in the last seven months. The United Kingdom was by far the largest contributor to the growth in Canada's exports to non-US countries—the result of higher exports of refined gold. Imports from countries other than the United States were down 1.3 percent in November. Imports from Peru, South Korea and Germany saw the largest decreases. After reaching a record high in October, imports from China remained high, despite falling 2.1 percent on lower imports of wind turbines. Canada's trade deficit with countries other than the United States narrowed from $6.9 billion in October to $5.7 billion in November.

Exports to the United States fell 2.2 percent in November, while imports edged up 0.3 percent. As a result, Canada's trade surplus with the United States narrowed from $3.1 billion in October to $2.3 billion in November.

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