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Canadian international trade in services, May 2020

Released: 2020-07-02

Canada's monthly international trade in services surplus declined from $277 million in April to $115 million in May. Overall, exports of services fell 2.6% to $7.9 billion and imports declined 0.6% to $7.8 billion. While Canada's international trade in services imports and exports continued to decline this month, the rate of decline has slowed significantly from the large downward movements observed in April.

COVID-19-related border closures to non-essential travel continued to be in place for Canada in May, a second consecutive complete month.

As the closure to non-essential travel of the border between Canada and the United States has been extended until at least July 21, it is expected that the levels of both exports and imports of travel services and the passenger fare component of transportation services will remain low for the foreseeable future. In May 2020, combined exports of travel services and transportation services accounted for 24.9% of total services exports, compared with 41.4% of total services exports in May 2019. The same shares for imports were 23.1% in 2020, and 51.7% in 2019.

Despite some provinces beginning to partially re-open their economies in May, international trade in services have not yet begun their recover to pre-COVID-19 levels.

Exports of commercial services were down 1.7% to $5.8 billion in May, as border closures continued to have an impact on business activity. Transportation services also recorded declines, down 8.3% to $912 million on lower receipts of passenger fares and for services provided to foreign airlines at Canadian airports.

Imports of commercial services declined 1.1% to $5.9 billion in May. Transportation services also decreased, related to lower imports of goods by water, while travel services posted a modest increase.

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

Chart 2  Chart 2: International trade in services, balances
International trade in services, balances

In comparison, total exports of goods increased 6.7% to $34.6 billion in May, while total imports of goods declined 3.9% to $35.3 billion, resulting in a goods deficit of $677 million. When combined, the trade balance for goods and services amounted to a deficit of $562 million in May, a decrease of $4.0 billion from April.

Chart 3  Chart 3: International trade in goods and services, May 2020
International trade in goods and services, May 2020

The services trade surplus for April, first reported at $302 million, was revised down by $25 million with this month's release of May data. Exports of services for April were revised down by $20 million, almost entirely on higher commercial services. Imports of services were revised up slightly, as a downward revision to travel services was almost entirely offset by upward revisions to transportation services and to commercial services.



  Note to readers

Adjustments to the methodological approach

Circumstances surrounding COVID-19 pose issues for the production of the monthly international trade in services statistics, particularly for travel services and transportation services.

Travel services and the passenger fares component of transportation services are estimated using tourist and traveller counts as indicators of monthly movement. These data are not available on a timely basis and are projected for the reference month before being replaced by the actual values in the following month. This approach worked in a typical month, but would not work in the current situation, where travel restrictions that reduce tourist and traveller numbers have been implemented very rapidly.

In order to better capture the effects of the COVID-19 pandemic, Statistics Canada is incorporating data from the Canada Border Services Agency's Primary Inspection Kiosks in the monthly international trade in services program. These are electronic customs declaration kiosks that are established in most major Canadian airports. While these data represent only a subset of total travellers, they provide relevant and timely insight.

Additionally, the methodology for the estimation of the monthly international trade in services statistics involves first projecting quarterly benchmark values and then dividing those quarterly values into monthly values using economic indicators. While the projected quarterly value was previously kept constant through the production of all three months of the quarter, with the current volatility, this particular element of the model was revisited and the benchmark values are being adjusted based on the most current data, as needed.

Revisions

Due to the unprecedented circumstances related to the COVID-19 pandemic, larger than typical revisions may occur in subsequent months as additional, but less timely, indicator data are incorporated into the monthly services program.

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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