Canadian international merchandise trade

Canada's merchandise trade surplus rebounded in August to the second highest level in three and a half years as imports fell at a faster rate than exports.

Exports declined slightly for a second month in a row, falling 0.4% to $37.8 billion on lower exports to the United States and Japan.

Canadian companies imported $30.2 billion worth of merchandise, down 4.4% over July. This decline encompassed all seven import commodity sectors.

As a result, Canada's merchandise trade surplus jumped by $1.3 billion to $7.5 billion.

Demand for goods faltered south of the border, as exports to the United States fell by 1.1%. At the same time, Canadians purchased 6.5% less from American firms. This resulted in a $1.1 billion increase in Canada's trade surplus with the United States to $10.1 billion—only the third time on record that Canada's trade surplus with the United States has topped $10 billion.

Exports to countries other than the United States increased slightly to $7.0 billion. At the same time, non-US imports increased 2.1% to $9.7 billion. As a result, Canada's non-US trade deficit fell to $2.7 billion from $2.9 billion in July.

Weather affects export demand

Energy products exports cooled slightly in August, down 2.6% to $6.3 billion. Natural gas exports fell by 1.7% to $2.7 billion. With export prices rising, volumes fell by 4.7% because of adequate underground storage inventories in the United States for the upcoming heating season. Crude petroleum exports declined by 2.9% to $2.3 billion. Other energy product exports fell by 3.8% to $1.3 billion. Most prominent in this decline were exports of electricity. While volume rose slightly the export price index fell by 3.6%.

Exports of machinery and equipment declined 2.0% to $7.9 billion. Following a buoyant June and July, exports of aircraft and other transportation equipment exports fell by 3.5% to $2.0 billion. Industrial and agricultural machinery exports fell by 4.0% to $1.8 billion. The other machinery and equipment commodity grouping declined only slightly, thanks to solid growth in exports of television and telecom and related equipment (up 6.9% to $1.1 billion).

Forestry product exports fell slightly to $3.5 billion, as strong demand for lumber and sawmill products in the United States failed to offset reductions in exports of newsprint and other paper exports (down 5.0% to $1.0 billion) and wood pulp and wood product exports (down 3.1% to half a billion dollars). Lumber exports were up by 12.6%, due in part to price increases coupled with a stronger Canadian dollar. The impact of the hurricane season increased demand for plywood in smaller Caribbean nations while curtailing supply in Florida, where wood product plants were shut down.

Non-US exports of forestry products have increased lately—especially to Japan and China. The recently released Chinese Timber Structural Design Building Code makes wood-frame houses a viable alternative to traditional concrete construction.

Exports of industrial goods and materials increased marginally to $6.6 billion, when strong foreign demand for metal ores offset reduced exports of all chemicals, plastics and fertilizers (down 0.7% to $2.3 billion), metals and alloys (down 5.1% to $2.1 billion) and other industrial goods and materials (down 1.4% to $1.6 billion). Global shortages of nickel, a key ingredient in stainless steel, pushed prices up 34.1% in August. Volume increases in nickel shipments were concentrated in partially refined and unrefined nickel.

Automotive exports bounced back in August, rising 1.5% to $7.7 billion. Most of the increase was attributed to motor vehicle parts. Exports rose by 4.3% to $2.3 billion when the parts supply chain re-loaded following lower production in July. Exports of passenger autos increased slightly to $4.1 billion. Exports of trucks and other motor vehicles fell slightly to $1.2 billion.

Exports of agricultural products rebounded with an increase of 1.3% to $2.8 billion, mainly a result of improved conditions for wheat during the 2004 growing season. Exports of wheat grew by 25.8% to $418 million, mainly to Japan and China.

Imports down in all merchandise sectors

A six month increase in imports of industrial goods and materials ended in August with a 4.3% decline to $6.1 billion. Imports of nearly all commodity groupings within the industrial goods and materials sector declined in August.

Energy product imports decreased 9.4% to $2.1 billion. Imports of crude petroleum gained 8.4% to $1.5 billion. Meanwhile, lower demand for electricity for air conditioning during a relatively cool August resulted in a drop in imports of other energy products used to generate electricity (down 36.3% to $576.6 million).

Imports of automotive products declined by 5.4% to $6.7 billion. Passenger auto and chassis imports declined 14.2% to $1.9 billion. Trucks and other motor vehicles decreased by 7.3% to $1.3 billion. Imports of motor vehicle parts for new car production and repairs increased slightly to $3.5 billion.

Imports of machinery and equipment declined by 4.8% to $8.5 billion. With the exception of aircraft and other transportation equipment, all commodity groupings in the machinery and equipment sector declined.

Imports of consumer goods fell 4.3% to $3.9 billion on widespread declines.

Available on CANSIM: tables 228-0001 to 228-0003 and 228-0033 to 228-0046.

Definitions, data sources and methods: survey numbers, including related surveys, 2201, 2202 and 2203.

The August 2004 issue of Canadian International Merchandise Trade (65-001-XIB, $15/$151) will soon be available. The publication includes 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-XIE, $32/$100).

Merchandise trade data are available in PDF format on the morning of release.

For more information on the publications, contact Jocelyne Elibani (613-951-9786 or toll free: 1-800-294-5583). To enquire about the concepts, methods or data quality of this release, contact Daryl Keen (613-951-1810), International Trade Division.