Canadian international merchandise trade

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Canadian merchandise imports set a new record high in July, in the wake of the appreciation of the Canadian dollar in recent months.

Imports continued to gain ground, jumping 3.5% to $35.7 billion, from a revised $34.5 billion in June. This second consecutive monthly rise was led by an advance in imports of automotive products.

Canadian companies exported $39.3 billion in July, a 1.4% increase from the revised $38.8 billion in June. Industrial goods and materials as well as automotive products were the driving forces behind this increase.

As a result, the nation's trade surplus with the world narrowed to $3.7 billion, as imports increased at more than twice the pace of exports.

Similarly, Canada's trade surplus with the United States contracted to $6.5 billion, with imports increasing at a faster rate than exports.

Both trade surpluses fell to their lowest levels since October 2006.

At the same time, Canada's trade deficit with countries other than the United States widened slightly to $2.8 billion.

Since April, the Canadian dollar has appreciated 8.0% against the US dollar, making imported goods cheaper. Simultaneously, the volume of imports has increased.

Exports rise as industrial goods reach a new peak

Strong growth in exports of industrial goods and materials as well as automotive products boosted total exports in July.

Exports of industrial goods and materials hit a record high of $9.7 billion, climbing 6.6% in July on the combined strength of metals and alloys as well as metal ores. Metals and alloys jumped 12.3% to $3.6 billion, while metal ores soared 27.9% to $1.5 billion. In contrast, exports of chemicals, plastics and fertilizers were down 6.4%, following declines in inorganic chemicals.

After three months of declines, automotive products rose 7.1% to $6.7 billion in July, but were still below their March 2007 level, the highest point this year. The bulk of the rise stemmed from passenger autos, which increased 12.0% to $3.4 billion. Exports of motor vehicle parts as well as trucks and other motor vehicles also contributed to the increase.

Machinery and equipment exports edged up 0.8% in July. The biggest increases were in television, telecommunication and related equipment (+13.4%) as well as industrial and agricultural machinery (+3.3%). These increases were tempered by exports of aircraft and other transportation equipment, which slipped 0.3% to $1.7 billion.

Exports of other consumer goods edged up 0.8% to $1.6 billion. This sector has been on a downward slide since peaking in December 2006.

Energy products fell 6.6% to $7.0 billion, the second monthly decline in a row. Exports of natural gas declined sharply, as did exports of other energy products, particularly electricity. The decrease in natural gas exports was entirely the result of lower prices, as volumes rose 1.1%. In the case of electricity, volumes declined while prices rose. A small increase in crude petroleum exports, resulting from a rise in volumes and a drop in price, mitigated these declines.

Forestry products slipped 0.9% to $2.4 billion, the fourth decrease in as many months. A 2.7% drop in newsprint and other paper products led the decline, followed by wood pulp and other wood products. In contrast, exports of lumber and sawmill products increased 1.0% to $1.1 billion.

Exports of agricultural and fishing products dipped 0.7% to $2.8 billion, as wheat exports plunged 25.2%, offsetting the peak attained earlier in 2007. Exports of canola surged in July, following last month's decrease. Canola exports have been invigorated by ample Canadian supply and increased world demand. In particular, China's oilseed crops have been under stress following droughts in the northeastern part of the country.

Imports hit a new record high

Imports increased for the second consecutive month. Higher imports of automotive products, machinery and equipment as well as other consumer goods outweighed declines in the four remaining sectors.

The automotive sector bounced back in July, rising 14.1% to $7.1 billion. This increase overturned the last three monthly declines, bringing automotive products to a level only slightly below March 2007, its highest point this year. Demand for motor vehicles in Canada remained high; accordingly, passenger autos jumped 26.4%. Motor vehicle parts also contributed to the rise in the sector, increasing 13.2%. In contrast, trucks and other motor vehicles fell 1.0%.

Machinery and equipment imports rose 2.8% to just shy of $10 billion. Imports of aircraft and other transportation equipment maintained their upward trend, soaring 30.1% to a record high of $1.7 billion. However, this growth was dampened by declines in industrial and agricultural machinery, as imports of engines, turbines and motors returned to previous levels. Lower imports of office machines and equipment also contributed to the decrease.

The downward trend in other consumer goods came to a halt in July, as the sector increased 3.8% to $4.6 billion. Lower imports of miscellaneous consumer goods, particularly pharmaceuticals, were responsible for the increase.

After two months of strong increases, imports of energy products tumbled more than 10% to $3.1 billion, returning to May levels. Both crude petroleum and other energy products contributed to the plunge. A decline in volume led to the 6.8% decrease in crude petroleum, despite an increase in price. A deep cut in the volume of coal and other related products drove imports of other energy products downward 17.8%.

Imports of agricultural and fishing products edged down 0.4% to $2.1 billion, as declining imports of fruits and vegetables more than offset rising imports of other agricultural and fishing products, particularly sugar and sugar preparations.

Industrial goods and materials remained flat at $7.2 billion. The overall stability of the sector masked more significant movements within it, as declining imports of metals and metal ores eclipsed record imports of chemicals and plastics. Chemical ingredients used in the manufacture of various medications contributed to the rise.

Available on CANSIM: tables 228-0001 to 228-0003, 228-0033, 228-0034, 228-0041 to 228-0043 and 228-0047 to 228-0055.

Definitions, data sources and methods: survey numbers, including related surveys, 2201, 2202 and 2203.

The July 2007 issue of Canadian International Merchandise Trade, Vol. 61, no. 7 (65-001-XIB, free) is now available from the Publications module of our website. The publication includes tables by commodity and country on a customs basis. Current account data (which incorporate merchandise trade statistics, service transactions, investment income and transfers) are available quarterly in Canada's Balance of International Payments (67-001-XWE, free).

The publication is available free in PDF format on the morning of release.

For more information on products and services, contact Sharon Nevins (toll-free 1-800-294-5583; 613-951-9798). To enquire about the concepts, methods or data quality of this release, contact Anne Couillard (613-951-6867), International Trade Division.

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