Canada posts higher-than-expected trade deficit in September on lower prices
Exports drop by 0.1%, mainly due to drop in prices
Imports declined 0.4%, flat in volume terms
Canada increases its trade surplus with the US
Bets for 50 bps cut in rate in Dec at almost 50%
Adds economist comments in paragraphs 9,10 and 14
By Promit Mukherjee and Fergal Smith
OTTAWA, Nov 5 (Reuters) -Canada posted a higher than expected trade deficit of C$1.26 billion ($908 million) in September mainly on account of lower prices which pulled down the value of exports but overall volumes of outbound shipments rose, data showed on Tuesday.
The September data was its seventh straight monthly trade deficit, primarily led by a fall in value of lower exports to major trading countries other than its biggest trading partner the United States, Statistics Canada said.
Most of the decline in exports was due to lower prices of crude oil and other commodities which cumulatively dropped by 1.5%. In volume terms exports were up 1.4%.
Economists said the data showed exports were strong in September and that should give momentum to trade in the fourth quarter.
Due to an ongoing digital transition at Canada Border Services Agency Assessment and Revenue Management, from where Statscan gets most of its trade data, results for September include greater use of estimation.
Analysts polled by Reuters had predicted a deficit of C$800 million and Statscan revised sharply the August trade deficit to C$1.47 billion from C$1.1 billion.
The biggest hit to exports, which fell by 0.1%, came from a 5.4% drop in shipments of metal and non-metallic mineral products, led by a 15.4% slump in the unwrought gold category.
Total exported goods prices dropped 1.5%, Statscan said.
"So these were really pricing stories both when you look at metals and energy," Stuart Bergman, chief economist at Export Development Canada.
"There is some cause for optimism in some of those details," he said.
Inbound shipments declined 0.4% in September but were largely flat in volume terms. Imports of metal and non-metallic mineral products decreased 12.7% and contributed the most to the overall decline.
The drop in imports largely reflect Canada's weak demand environment and sluggish growth prospects which have taken a hit under the impact of high interest rates which the Bank of Canada started reducing from June.
Since then, the BoC has cut its key policy rate to 3.75%.
Economists are hoping further cuts in interest rates will help reinvigorate local demand in the coming quarters.
The BoC will announce its next monetary policy decision on Dec. 11 with money markets bets inching close to 50% for a 50-basis point cut. 0#BOCWATCH
The Canadian dollar CAD= firmed by 0.18% to 1.3876 to the U.S. dollar by 1333 GMT, or 72.07 U.S. cents. Yields on two-year government bonds CA2YT=RR were up 2.89 bps at 3.134%.
Total exports were at C$63.88 billion while imports were at C$65.14 billion.
Canada's trade surplus with the United States, which accounts for over three-quarters of its total exports, increased to C$8.29 billion in September from C$7.82 billion a month ago. Imports from the United States, which is 60% of all Canadian imports, rose 0.8% month-on-month.
($1 = 1.3882 Canadian dollars)
Reporting by Promit Mukherjee, Fergal Smith and Dale Smith; Editing by Emelia Sithole-Matarise, William Maclean
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
