Data released on Thursday showed an increase in the trade surpluses from CAD 2.17 billion to 5.32 billion in May. Analysts at CIBC warn the increase could be temporary considering it was driven in part by a strengthening in oil prices which has reversed more recently.

Key Quotes: 

“The goods trade surplus widened sharply in May, although the move was driven in part by a strengthening in oil prices which has reversed more recently. The $5.3bn surplus was up from a revised $2.2bn in April (prior $1.5bn), was the widest since August 2008 and was well above the consensus forecast. On the services side, the deficit narrowed slightly from $1.3bn in April to $1.1bn in May. That left the overall trade surplus at $4.2bn, from $900mn in the prior month.”

“Today's sharp widening in the Canadian trade surplus could be as good as it gets for now, given that energy prices have fallen relative to where they stood in May and that imports will likely rebound ahead alongside the reopening in China. However, some of the strength in non-energy exports, such as potash, copper and other metals/minerals could persist if Canadian companies are able to raise production and offset some of the holes left in the global supply chain by the sanctions imposed on Russia following its invasion of Ukraine.”

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