Thursday’s data shows that Canada’s trade balance has returned to a surplus. National Bank of Canada analysts note that this is the largest surplus since September 2008. On a quarterly basis, analysts warned that continued trade in goods was likely to weigh on growth in the second quarter.
“The merchandise trade balance returned to a surplus in June, a level not seen since September 2008. Except for the period immediately following the arrival of COVID-19 in Canada, the monthly increase in exports was the second largest increase in data since 1988.
“International shipments were boosted by strong performance in the energy sector, the latter of which benefited from higher prices and increased demand. The monthly increase lifted energy exports by 14.9% above the pre-pandemic peak (2019M12). Exports were not limited to the energy sector.”
“The trade surplus with the United States reached its highest level in 13 years in June. It is worth noting that our southern neighbors began to reopen their economies earlier, allowing US demand for Canadian products to recover.”
“In terms of quarterly data, trade in goods is likely to impact Canadian growth in the second quarter as real exports (-4.7% quarterly) fell more than real imports (-0.5%) with the strong expansion of import volumes in the machinery equipment category ( + 4.0% q/q), we expect good news for capex in the second quarter of 2021.”
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