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The Daily. Tuesday, July 20, 1999

Canadian international merchandise trade

Exports increased more than imports in May, pushing the trade balance to $2.4 billion.

Exports rose 0.5% to $28.9 billion. However, they have increased very little from the previous record level of January 1999 ($28.8 billion). The marked increase in exports of coal, wheat, seafood, cars and minerals more than offset the sharp drop in aircraft and forest product exports.

Imports remained virtually unchanged for the third consecutive month (+0.1%). The recovery in imports of machinery and equipment and automotive parts was almost completely offset by the drop in imports of gold, iron and steel products and active agents in the manufacture of medication.

The trade balance remained strong, increasing from a revised $2.3 billion in April to $2.4 billion in May. This balance has been steady since January (a monthly average of $2.4 billion) at levels clearly higher than those recorded in 1998 (monthly average of $1.6 billion).

Exports slightly surpassed January's record level

Exports of energy products continued moving up (+8.7% in May) for the third consecutive month. Coal showed the sharpest increase, particularly exports to Japan and South Korea. This volume increase is mainly due to a timing effect, with most spring exports being registered to those countries in May. Crude oil exports increased for the fifth consecutive month, the result of higher prices caused by OPEC's successful supply controls.

Exports of agricultural and fishing products rose 6.4% in May; this gain was chiefly due to higher wheat and seafood exports. Two major factors explain the 35.6% increase in exports of wheat: higher exports to Algeria, Indonesia, Iran and Morocco, and lower American production for winter wheat, which was unable to meet strong U.S. demand. Strong demand in Japan and the United States for Canadian crab and lobster drove prices up over last year (over 50% in the case of crab). However, canola exports fell in May, caused mainly by a lack of sales to China. Furthermore, the substitution of Canadian canola with canola from European Union countries significantly reduced Canadian exports to Mexico.

Note to readers To improve data quality, the methodology used to estimate custom-based monthly canola exports to non-U.S. destinations has been modified. Canadian Grain Commission figures are used to supplement information from custom export declarations. January to May 1999 data reflect this methodology. Previous estimates corrected during the annual revision process also use this new methodology. Merchandise trade is one component of the current account of Canada's balance of payments, which also includes trade in services.

Automotive product exports continued inching up, mainly due to a 2.3% increase in exports of passenger cars. However, this advance was not sufficient to offset losses in April, and May exports of passenger cars were $300 million lower (-3.8%) than in March.

After a sharp increase in April, exports of forest product dropped in May. Although all sub-sectors fell, the largest drop was in exports of newsprint. The Canadian newsprint industry was operating at 88.0% capacity in May compared with 96.0% in May 1998. This reduction reflected a surplus of newsprint on the market, which drove prices down.

Machinery and equipment exports fell in May for the second consecutive month. The sharp decline in aircraft exports drove down the entire sector after the record level reached in January.

Imports remained stable

Imports have remained virtually unchanged since February, and in May were $300 million lower (-1.2%) than the record reached in December 1998. The strong recovery in imports of televisions, magazines and periodicals and automotive parts was almost completely offset by the sharp drop in imports of aircraft, oil, gold and primary steel products.

The machinery and equipment sector rose slightly in May. The upward trend in imports of computers and communication equipment was almost completely negated by the sharp drop in aircraft imports.

Automotive product imports remained relatively stable. The recovery in imports of automotive parts and passenger cars was neutralized by a sharp drop in truck imports. Strong Canadian car sales and increased production since the beginning of the year led to higher imports of cars (+16.7%) and automotive parts (+12.0%) compared with May 1998. However, truck imports were down 12.4% compared with May last year.

After rising for three consecutive months, imports of energy products fell slightly in May, owing to the sharp decline of crude oil imports. This drop in volume coincided with high inventories and a slight increase in prices.

Imports of industrial products fell for the second consecutive month. The sector was driven down mainly by two highly volatile series - gold and active agents used in the manufacture of medications.

Revisions

In general, merchandise trade data are revised on an ongoing basis for each month of the current year. Factors influencing revisions include late receipt of import and export documentation, incorrect information on customs forms, replacement of estimates with actual figures (once available), changes in classification of merchandise based on more current information and seasonal adjustments. Consult the appropriate CANSIM matrices for revised data.

Available on CANSIM: matrices 3618, 3619, 3651, 3685-3699, 3701-3711, 3713, 3720, 3887-3913, 8430-8435, 8438-8447.

This release contains a summary of the merchandise trade data to be published shortly in Canadian international merchandise trade (65-001-XPB, $19/$188; 65-001-XIB, $14/$141). The publication will include 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-XPB, $38 /$124). See How to order publications.

Readers may obtain merchandise trade data on a more timely basis by fax on the morning of release.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Jocelyne Elibani (613-951-9647; 1-800-294-5583), Marketing and Client Services Section, International Trade Division.

Merchandise trade of Canada