Canada: Exports bounced back in July – RBC Economics
Nathan Janzen, Senior Economist at RBC Economics, notes that the Canadian trade deficit in July narrowed to –$2.5 billion from a record $4.0 billion shortfall (revised from -$3.6 billion) in June while the exports jumped 3.4% and imports dipped 0.1% in July.
Key Quotes
“The export gain was led by broadly-based strength outside of the energy sector with 9 of 11 sections reporting increases. Even in the energy sector, a 0.8% dip in the month was due to lower prices with volume shipments up 3.2%. Overall, volume exports were up 3.4% with non-energy shipments rising at a similar pace. The dip in imports in July, although positive in an accounting sense for the net trade balance, was somewhat more disappointing, particularly a pull-back in industrial equipment imports that, if sustained, would bode poorly for business investment in the quarter.
The rise in export volumes left the measure already up 7.3% in July relative to its Q2 average, consistent with our forecast for a bounce-back following an outsized export drop of 18.5% in Q2. With import volumes down in the month, net trade appears likely to make a strong contribution to Q3 GDP growth, potentially retracing half or more of the Q2 weakness when net trade subtracted almost 6 percentage points from growth.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
