Canada: International trade in goods is showing improvement after bottoming in April – NFB

The trade deficit in Canada during May narrowed more than expected, to CAD 700 million, the lowest in six months. Kyle Dahms, analysts at the National Bank of Canada, argues the trade report for May is merely showing a small improvement. They remain confident that the current pickup in economic activity should sustain a rebound. 

Key Quotes:

“Canadian international trade in goods is now showing an improvement after reaching a low point in April due to the introduction historical measures to contain the spread of the coronavirus. Exports increased in May in large part owing to a massive surge in autos/parts (+76.2%) as plants resumed production.”

“Total trade (exports+imports) was up a meager 1.1% in May after the record drop of 27.1% in April. Although the trade report for May is merely showing a small improvement we remain confident that the current pickup in economic activity should sustain a rebound. Still that does not mean things will get back to normal soon. We are still early in the recovery as shown by still elevated unemployement rates worldwide. This combined with a potential onshoring phenomenon is likely to subdue international trade for some time.”