The Daily. Wednesday, December 19, 2001

Canadian international merchandise trade

Canada's imports and exports of merchandise fell in October to their lowest levels in almost two years.

Canadian companies exported $32.4 billion in merchandise, down 1.0% from September and the lowest level since November 1999. Merchandise imports declined 0.6% to $28.2 billion, also the lowest level since November 1999.

October marked the seventh straight monthly decline for exports and the fourth straight decrease in imports. However, the pace of the declines in October was far slower than in September, when exports fell 2.7% and imports dropped 4.5% (both revised).

Canada's trade surplus in goods fell to just under $4.2 billion in October. So far this year, Canada has exported $54.8 billion more in merchandise than it has imported-a surplus about $6.9 billion higher than in the same 10-month period in 2000. However, near-record surpluses in the first quarter of 2001 provided much of the momentum for this growth.

Merchandise exports to the United States, Canada's largest trading partner, fell 1.6% in October to $27.5 billion. Imports from south of the border were down 0.6% to $20.3 billion. As a result, the trade surplus with the United States declined from $7.5 billion to $7.2 billion.

Aircraft exports reach new heights

Only three of seven main export commodity groupings recorded increases in October: machinery and equipment, energy products and forestry products.

Strong export growth in aircraft, engines and parts-the lone bright spot in the machinery and equipment sector-resulted in a 3.0% rise in exports to $7.9 billion. Greater international demand for Canadian-made passenger jets, coupled with delivery delays from September, pushed aircraft exports up 49.4% to a record $1.7 billion in October.

Note to readers Merchandise trade is one component of the current account of Canada's balance of payments, which also includes trade in services. 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 documents, 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 tables for the revised data.

Television, telecom and related equipment exports resumed a steep decline in October, dropping 21.7% to $833.0 million. This sector, mainly telecommunications equipment, exported just over one-third of December 2000's record amount. October marked the lowest monthly export amount from this commodity group since May 1996.

The automotive products sector declined 2.1% to $7.4 billion. While consumers took advantage of low financing rates and other incentive programs in October, most sales targeted existing dealer inventory. Exports of passenger autos declined 2.4% to $3.8 billion, motor vehicle parts fell 2.5% to $2.2 billion and the trucks and other motor vehicles sub-sector dropped 1.0% to $1.4 billion.

Industrial goods and materials exports fell 5.4% to $5.4 billion. Month-to-month fluctuations in exports of metal alloys and ores are more a result of high-value shipments taking place in some months and not others; the fluctuations do not necessarily reflect monthly variations in commodity price or demand. For 2001, export levels have remained relatively flat.

Exports of energy products rose 0.5% to $3.5 billion in October on the strength of increases in crude oil (+14.4% to $1.2 billion) and natural gas (+2.5% to $1.5 billion) exports. Exports of "other energy products" fell 18.3% to $786.9 million. Within "other energy products", electricity exports fared particularly poorly-dropping 56.1% from September and tumbling 61.8% compared with October 2000-as prices and export markets declined dramatically in the face of slackened industrial demand from the United States. Petroleum and coal products exports fell 9.8% to $610.0 million-the seventh consecutive month of decline-in the face of continued lower demand for jet fuel.

Forestry product exports rose 0.8% to $3.1 billion. Wood pulp and other wood products posted the strongest export growth in the forestry sector with a 9.8% increase to just over half a billion dollars. Newsprint rebounded 2.1% to $1.2 billion after three months of decline. Expanded news coverage of the war on terrorism lifted demand for newsprint and coated magazine stock in October. Lumber and sawmill product exports fell 2.9% to $1.5 billion, mainly a result of lower exports of softwood lumber to the United States, which fell 3.5% to $933.4 million. Lumber exports have now declined for three consecutive months.

Agricultural and fish product exports declined 2.4% to $2.6 billion. A higher price for wheat boosted exports 16.2% to $374.9 million on news that dry weather had resulted in a stunted American crop.

Imports: five-month fall in energy leads overall decline

Energy imports-which declined substantially from June to October-have led the overall decline in Canada's merchandise imports since July. Total merchandise imports have fallen since July by 5.9% to $28.2 billion.

Machinery and equipment imports slid 0.6% to $8.6 billion in October. Imports of aircraft, engines and parts sagged 13.2% to $875.3 million, as air carriers struggled with reduced passenger loads. Other transportation equipment imports, which include rail cars, snowmobiles and tires, jumped 30.8% to $434.4 million.

Imports of office machines and equipment slipped 1.9% to $1.3 billion, the third consecutive monthly decline. Industrial and agricultural machinery imports were down 0.3% to $2.2 billion. On the plus side, imports of "other communications and related equipment", which includes semi-conductors, rose 6.1% to $1.4 billion. This pushed the other machinery and equipment sub-sector up a slight 0.4% to $3.8 billion in October.

Automotive products imports increased 0.3% to $6.0 billion. A decline in motor vehicle parts of 3.8% to $3.2 billion virtually cancelled import gains for finished vehicles. Imports of passenger autos rose 4.2% to $1.9 billion, while truck imports increased 9.0% to $862.4 million.

Imports of industrial goods and materials rose 0.8% to $5.6 billion. Within the chemicals and plastics subsector, imports of organic chemicals (used as the active ingredients in prescription medications) jumped 18.0% to just over $0.5 billion. Imports of metals and metal ores expanded 1.5% to $1.3 billion, with precious metals and alloys driving the increase (+22.3% to $300.7 million) in October.

Energy product imports slumped 15.8% to $1.2 billion. With prices in decline, energy imports have dropped 31.1% in the five months from June to October. Crude petroleum imports tumbled nearly one-quarter to $794.6 million and other energy products fell 8.8% to $417.5 million. Within the "other energy" sub-sector, imports of petroleum and coal products jumped 10.4% to $309.2 million, mainly on higher than seasonal demand for diesel fuel for buses and trains.

Agriculture and fishing products imports increased 2.1% to $1.8 billion. The restricted feeder cattle import program, which provides Canadian feedlots with access to a larger supply of feeder cattle during the winter months from selected American states, resulted in a 57.7% surge in live animal imports in October, to just over $52 million. Higher than usual oilseed imports in October led to an increase in crude vegetable products of 17.9% to $106.2 million

Available on CANSIM: tables 228-0001 to 228-0003, 228-0033 to 228-0040, 227-0001, 227-0002, 226-0001 and 226-0002.

This release contains a summary of the merchandise trade data that will be published shortly in Canadian international merchandise trade (65-001-XIB, $14/$141; 65-001-XPB, $19/$188). 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-XIB, $29/$93; 67-001-XPB, $38/$124).

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

For information about data products and services, or to order data, contact Jocelyne Elibani, (613-951-9647; 1 800 294-5583), Marketing and Client Services. For further analytical information, or to inquire about the concepts, methods or data quality of this release, contact Daryl Keen (613-951-1810), International Trade Division.

Merchandise trade