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Canadian international trade in services, June 2020

Released: 2020-08-05

Canada's monthly international trade in services balance went from a surplus of $232 million in May to a deficit of $727 million in June. Overall, imports of services increased 17.0% to $8.8 billion and exports rose 4.1% to $8.1 billion, as Canada's international trade in services began to show signs of recovery following declines due to business closures and travel restrictions related to COVID-19.

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

In June, imports of services increased at a faster rate than exports, largely due to higher imports of travel services. This is in contrast with what was observed during earlier stages of the COVID-19 pandemic, where imports of services declined at a quicker pace than exports.

Imports of travel services rose $607 million to reach $941 million in June. While travel services imports were up significantly, they were still 76.0% below their February 2020 level. In comparison, the value for May 2020 was 91.5% lower than the February 2020 value. Travel restrictions remained in place in many countries, and Canadians were still advised against any non-essential international travel in June.

Imports of commercial services increased 8.4% to $6.0 billion in June, as COVID-19-related restrictions on businesses were relaxed in some parts of the world. Imports of transportation services were up 13.8% to reach $1.7 billion in June, related to increased trade in goods activity as well as a modest increase in passenger fares.

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

Exports of commercial services increased 2.9% to $5.8 billion in June as COVID-19-related restrictions on businesses also continued to be relaxed across Canada and more businesses were able to resume operations. While exports of commercial services increased for a second consecutive month, they were still 13.9% below their February 2020 level. Exports of travel services also increased, up 10.3% to $1.1 billion.

Chart 3  Chart 3: International trade in services, exports
International trade in services, exports

Chart 4  Chart 4: International trade in services, balances
International trade in services, balances

In comparison, total imports of goods increased 21.8% to $42.9 billion in June, while total exports of goods rose 17.1% to $39.7 billion, resulting in a goods deficit of $3.2 billion. When combined, the trade balance for goods and services amounted to a deficit of $3.9 billion in June, an increase of $2.8 billion from May.

Chart 5  Chart 5: International trade in goods and services, June 2020
International trade in goods and services, June 2020

The services trade surplus for May first reported at $115 million, was revised up by $117 million with this month's release of June data. Imports of services for May were revised down by $269 million, almost entirely on lower commercial services. Exports of services were also revised down, by $152 million, on lower commercial services and travel 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.

Because of the unusually small values in travel services since April 2020, future revisions to seasonally adjusted data for the months of 2020 can be expected to be larger than usual. With uncertainty about how long the impacts of COVID-19 on world tourism activities will continue, the unadjusted (raw) travel data may provide more useful information for users on the short-term changes in international travel services data.

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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