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Canadian international trade in services, February 2021

Released: 2021-04-07

Canada's monthly international trade-in-services balance went from a deficit of $236 million in January to a surplus of $79 million in February, led by a higher travel services surplus. Overall, imports of services declined 4.9% to $9.1 billion, and exports were down 1.6% to $9.1 billion. The international trade-in-services balance has been in a surplus position for most of the months since April 2020. Prior to then, there had not been a monthly surplus since the beginning of the series in January 2007.

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

Imports of travel services fell 29.8% to $441 million in February, as the number of Canadians returning from abroad declined in February, following increases in December and January. Canadian airlines suspended flights to the Caribbean and Mexico beginning at the end of January, and more stringent COVID-19 testing and quarantine regulations for Canadian-resident travellers returning to Canada were announced and came into effect in February.

Imports of transportation services were down 8.9% to $1.7 billion on lower payments related to the marine shipment of imported goods and on lower payments of passenger fares by Canadians returning from abroad. Imports of commercial services also decreased in February, down 1.6% to $6.8 billion on lower imports of financial services.

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

Exports of travel services declined 5.1% to $905 million in February, as the number of non-resident travellers visiting Canada declined. More stringent testing and quarantine regulations that came into effect in February also applied to international travellers entering Canada. Exports of transportation services decreased 4.1% to $1.2 billion, and exports of commercial services were down 0.7% to $7.0 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

By comparison, total exports of goods decreased 2.7% to $49.9 billion in February, and total imports of goods declined 2.4% to $48.8 billion, resulting in a goods surplus of $1.0 billion. Combined, the trade balance for goods and services amounted to a $1.1 billion surplus in February—up $148 million from January.

Chart 5  Chart 5: International trade in goods and services, February 2021
International trade in goods and services, February 2021

The services trade deficit for January, first reported at $236 million, was unchanged with this month's release. Exports of services for January were revised up by $41 million, on upward revisions to commercial services and travel services. Imports of services were revised up by $41 million, entirely on upward revisions to travel services.



  Note to readers

Travel services and related services

In light of travel restrictions and border closures related to the COVID-19 pandemic, atypical values for travel services not related to education, and for the passenger fares component of transportation services were reported for most of 2020.

To publish consistent estimates of seasonally adjusted values, seasonal factors from 2019 were applied to the unadjusted data for 2020. While using 2019 factors allowed for a certain amount of coherence and consistency in the seasonally adjusted estimates, it resulted in a larger-than-usual discrepancy between the annual totals for the seasonally adjusted series and the unadjusted series that must be reconciled at the end of the year, as is common practice.

As a result, this reconciliation created a substantial decrease in exports from December 2019 to January 2020. Data for 2019 will be open for revisions in the fall of 2021, and seasonal adjustment models may be revised at that time.

Under more typical seasonal patterns, this decline would not have been as large. Users are advised to use caution when analyzing month-over-month movements for seasonally adjusted exports for the two series, especially during this period, and may wish to include unadjusted data in their analysis.

Adjustments to the methodological approach

Circumstances surrounding COVID-19 pose issues for the production of monthly international trade-in-services statistics, particularly for travel 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 the following month with the actual values. This approach works in a typical month but does not work in the current situation, in which travel restrictions to reduce tourist and traveller numbers were implemented very quickly.

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 into its monthly international trade in services program. These are electronic customs declaration kiosks that have been installed in most major Canadian airports. While these data represent only a subset of total travellers, they provide relevant and timely insights.

In addition, the methodology used to estimate the monthly international trade in services statistics involves first projecting quarterly benchmark values, then dividing these quarterly values into monthly values using economic indicators. While the projected quarterly value was previously kept constant throughout the production process for all three months of the quarter, with the current volatility, this particular element of the model was revised, and the benchmark values are being adjusted, as needed, based on the most current data.

Methodology

Because several data sources used to compile the data from the international trade in servces program are available on a quarterly or annual basis only, 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 commercial and travel services, as well as some transportation services, 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 act as a proxy for 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. Third, 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.

Products

The updated Canada and the World Statistics Hub (Catalogue number13-609-X) is available online. It illustrates the nature and extent of Canada's economic and financial relationship with the world using interactive charts 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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