Canada: Goods surplus with US reaches highest level since the recession

The October trade balance report was released today in Canada. Jocelyn Paquet, analyst at the National Bank of Canada points out that trade tensions cloud an otherwise positive trade report.

Key Quotes:

“The trade deficit unexpectedly narrowed in October as exports rebounded from the prior month’s dip. The effects of the General Motors strike clearly showed up in the report with both exports (- 2.9%) and imports (-3.3%) of motor vehicles/parts registering sizeable declines. Also noteworthy, exports to China fell no less than 19.3% in the month, the steepest monthly retreat recorded since 2012 (excluding shipments to China, nominal exports were actually up 1.6%).”

“It seems the diplomatic row between Ottawa and Beijing was at least partly responsible for the drop. To be sure, Canadian shipments of farm, fishing and intermediate food products fell 10.9% in October as exports of soybeans to China plummeted - recall that the Middle Kingdom started blocking Canadian imports of the stuff back in April.”

“Canadian goods shipments to China totaled C$20.8 billion in the first 10 months of 2019, down 12.3% form the same period last year.”

“Canada’s trade balance with the U.S. reached its highest level since the Great recession of 2008-09, something that may not go down well in Washington. Encouragingly, we are getting news that the U.S. Congress is making progress towards the ratification of the USMCA deal. This would go a long way in alleviating worries of Canadian exporters.”

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