According to Statistics Canada, following historic declines in April that saw exports and imports lose more than one-quarter of their monthly value due to the COVID-19 pandemic, exports increased 6.7 percent in May, mainly reflecting the resumption of production in the auto industry as well as higher crude oil prices. Meanwhile, imports decreased a further 3.9 percent, reflecting supply challenges at a time when various economies around the world were progressively re-opening.
Canada's merchandise trade deficit with the world narrowed from $4.3 billion in April to $677 million in May. In real (or volume) terms, exports were up 3.8 percent in May, while real imports fell 6.7 percent.
Following a 29.1 percent decline in April, total exports increased 6.7 percent in May, reaching $34.6 billion. Increases were observed in 8 of 11 product sections and non-energy exports were up 5.6 percent. However, on a year-over-year basis, total exports were down 34.1 percent.
After falling 25.2 percent in April, total imports declined a further 3.9 percent in May to $35.3 billion, with 7 of 11 product sections decreasing. On a year-over-year basis, total imports have lost almost one-third of their value.
Imports from non-US countries (-10.1 percent), which posted a less significant decline in April than imports from the United States, were responsible for the overall decrease in May. Although production shutdowns occurred in many of these countries in April, longer shipping times mean that the effects of important shifts may take longer to become apparent in Canadian import statistics. Imports from the United Kingdom (refined gold), South Korea (motor vehicles) and Japan (motor vehicles) contributed the most to the decline in May. Following significant declines earlier this year, imports from China (+6.2 percent) increased for a third consecutive month to reach $4.2 billion, the highest level since March 2019, mainly on higher imports of personal protective equipment.
Exports to countries other than the United States rose 2.4 percent in May, principally on higher exports to China (iron ore and crude oil) and France (aircraft and canola). Exports to China increased for a second consecutive month, and reached their highest level since December 2018. As a result, Canada's trade deficit with countries other than the United States narrowed from $5.5 billion in April to $3.5 billion in May, the smallest deficit since December 2016.
Exports to the United States were up 8.9 percent in May to $23.2 billion, which still represented a 40.0 percent decline compared with May 2019. Motor vehicles and parts and crude oil contributed the most to the rise in exports to the United States in May. Imports from the United States increased 1.2 percent to $20.4 billion, which represented a 39.0 percent year-over-year decrease.
As a result, Canada's trade surplus with the United States widened from $1.2 billion in April to $2.8 billion in May.