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Canadian international trade in services, January 2020

Released: 2020-03-06

In January, Canada's monthly deficit in international trade in services narrowed by $192 million to $1.6 billion. The decrease was a result of narrowing deficits for travel services and transportation services, and a higher surplus for commercial services.

Imports of services fell 2.4% to $12.7 billion in January, while exports of services declined 1.1% to $11.1 billion.

Travel services accounted for over half of the decreases in both imports and exports of services. Restrictions on air travellers in China were introduced in late January, and their impacts on travel services and on the passenger fares component of transportation services were considered limited for January. However, because the component of transportation services that excludes passenger fares is correlated with Canada's export and import of goods, its decline reflected the decreased activity in trade in goods in January.

Chart 1  Chart 1: International trade in services
International trade in services

In comparison, total imports of goods were $49.6 billion in January, while total exports of goods were $48.1 billion, resulting in a goods deficit of $1.5 billion. When combined, the trade balance for goods and services amounted to a deficit of $3.1 billion in January, an increase of $550 million from December.

Chart 2  Chart 2: International trade in goods and services, January 2020
International trade in goods and services, January 2020

The services trade deficit for December 2019, first reported at $1.3 billion, was revised up by $441 million with this month's release of January 2020 data. Exports of services for December were revised down by $269 million, as both travel services and commercial services had downward revisions. Imports of services were revised up by $173 million, on higher transportation services and travel services. This month's release reflects the integration of quarterly benchmark data from the balance of payments for the fourth quarter of 2019, and revisions to all other quarters of the year.

Coronavirus and Canada's international trade in services

In February, travel restrictions continued for China and were starting to be imposed elsewhere in an effort to contain the coronavirus. Because of this and the recent slowing of Chinese economic activity, travel services and transportation services are likely to be affected in the coming months.

Canada's international trade in services with China

Overall, Canada exports more services to China than it imports, while the opposite is true for goods. In 2019, China accounted for 6% of Canada's total services exports ($8.1 billion) and 2% of Canada's total services imports ($3.0 billion). Transportation services and travel services, which include education-related travel, accounted for the majority of both exports (90%) and imports (85%).

The most recent data indicate that roughly 81,500 of Canada's 296,000 international postsecondary students were from China. Travellers from China account for 10% of travellers from countries other than the United States, approximately 750,000 in 2019. For commercial services, exports to China are concentrated in research and development and intellectual property services, trade-related and other business services, architectural and engineering services, computer services, legal services, financial services, and audio-visual services. These service categories have a higher tendency to be traded across borders remotely, typically digitally, which makes them less likely to be affected by travel restrictions.



  Note to readers

Data availability

These monthly trade in services estimates are available on a raw basis and on a seasonally adjusted basis for four principal categories of international services at the total country level: commercial services, travel, transport and government services.

The purpose of this product is to provide more timely indicators on trade in services by supplementing the detailed quarterly and annual statistics on trade in services that are already included in the balance of payments. It will also provide a more comprehensive picture of Canada's overall international trade activity on a monthly basis, complementing the information on goods that has already been published.

Previously, data were released on an experimental basis: "Experimental monthly estimates of international trade in services, September 2019."

Methodology

Because several data sources used to compile the international trade in services program are only available on a quarterly or annual basis, the monthly statistics on Canada's international trade in services are generated using models when up-to-date information is not available. This follows the methodology used in many countries that produce monthly trade in services data.

In general, for most of the commercial services, travel, and some transport services, the modelling of monthly estimates follows a three-step approach. First, values for the upcoming quarter are estimated using statistical models (auto-regressive integrated moving average). Second, indicator series that proxy the monthly movement of trade in services are identified through relationships with other economic indicators, such as merchandise trade or gross domestic product by industry. Finally, a temporal disaggregation method (the Denton-Cholette method) is applied to distribute modelled quarterly services on a monthly basis, using the predicted values of monthly services generated in the second step. Adjustments are made each month as new information becomes available.

A more detailed description of estimation methodology for monthly trade in services is available upon request.

Products

The updated Canada and the World Statistics Hub (Catalogue number13-609-X) is available online. This product illustrates the nature and extent of Canada's economic and financial relationship with the world, using interactive graphs and tables. This product provides easy access to information on trade, investment, employment and travel between Canada and a number of countries, including the United States, the United Kingdom, Mexico, China, Japan, Belgium, Italy, the Netherlands and Spain.

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X) is available.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is also available. This publication will be updated to maintain its relevance.

Contact information

For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).

To enquire about the concepts, methods or data quality of this release, contact Alec Forbes (613-668-6454; alec.forbes@canada.ca), International Accounts and Trade Division.

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