Canadian international merchandise trade

Canada's merchandise trade surplus with the world widened in August in the wake of a decline in exports and an even sharper decrease in imports, which had hit a record high the month before.

Exports decreased 1.8% to $38.5 billion as only two sectors—machinery and equipment and agricultural and fishing products—recorded gains.

After peaking in July, imports fell 3.9% to $34.4 billion in August. Despite the considerable appreciation of the Canadian dollar against the American dollar since the beginning of 2007, August's decrease in imports was the result of widespread declines in all sectors except energy products and agricultural and fishing products.

With imports falling at twice the pace of exports, the nation's trade balance with the world expanded to $4.1 billion. At the same time, Canada's trade surplus with the United States widened to $6.7 billion.

The deficit with countries other than the United States narrowed to $2.6 billion, with all principal trading areas contributing to the contraction.

Exports decrease despite strong growth in machinery and equipment

Declines in exports of industrial goods and materials, and to a lesser extent automotive products, overshadowed gains in machinery and equipment and agricultural and fishing products, the only two sectors to record increases in August.

After hitting a record high in July, exports of industrial goods and materials contracted 9.0% to $8.8 billion. Although there was weakness in all areas of the sector, metal ores, particularly nickel, registered the largest decrease. Chemicals, plastics and fertilizers fell 4.3% to $2.8 billion, as exports of inorganic chemicals faltered.

Exports of automotive products declined 6.0% to $6.2 billion, following July's increase. The bulk of the decrease stemmed from passenger autos, which dropped 8.5% to $3.1 billion. Motor vehicle parts decreased 3.5% to $2.1 billion, while trucks and other motor vehicles declined for the fifth month in a row, falling below the $1-billion mark for the first time this year. Exports of automotive products have been on a downward trend since the start of 2007. Demand for motor vehicles in the United States has been weak over the summer months.

Exports of forestry products fell 1.0% to $2.4 billion, the fifth decrease in as many months. Canadian production has been curtailed by labour unrest in British Columbia. Newsprint and other paper and paperboard products also continued their downward trend, falling for the fifth consecutive month. On the other hand, wood pulp and other wood products that are used in the manufacture of paper rose 6.6% in August, as exports to China were especially strong.

Energy products slipped 0.3% to $7.2 billion, the third monthly decline. Increased exports of natural gas and other energy products, particularly coal and other bituminous substances, were offset by decreases in crude petroleum. The decline in crude petroleum was primarily the result of falling volumes, as prices decreased only marginally. In the case of natural gas, volumes rose while prices fell, whereas for coal, volumes rose much faster than prices.

Aircraft, engines and parts climbed 37.1% to $2.1 billion, propelling total exports of the machinery and equipment sector upwards 6.6% to $8.4 billion. Industrial machinery exports were up for the second consecutive month, rising 5.1% to a record high of $1.8 billion.

Following a dip in July, agricultural and fishing products were up 5.4% to $2.9 billion, as canola exports soared 35.2%. Canola production remained high as the burgeoning bio-diesel industry and the demand for high-quality specialty canola oils continued to support growth in this area.

Automotive products drive down imports

Imports decreased for the first time since May. Although the declines were widespread, the automotive products and industrial goods and materials sectors led the decrease. The only sector to record an increase was agricultural and fishing products.

Imports of automotive products tumbled 8.1% to $6.6 billion, partially reversing a gain in July, with motor vehicle parts and passenger autos accounting for the bulk of the decline. Motor vehicle parts plunged 8.2% to $2.9 billion, falling to their second-lowest level in almost 10 years, while passenger autos plummeted 9.7% to $2.3 billion. Trucks and other motor vehicles declined 5.2% to $1.4 billion, their lowest level this year.

Industrial goods and materials fell 6.2% to $6.9 billion. Chemicals and plastics, particularly organic chemicals, registered the largest drop, as imports of active agents used in the manufacture of pharmaceuticals declined. Metals and metal ores also declined in August.

Machinery and equipment fell 2.8% to $9.7 billion. Imports of aircraft and other transportation equipment were largely responsible, declining 12.1% to $1.5 billion and undermining the increases recorded in the previous months. Nevertheless, an increase in imports of industrial water filtration machinery and of office machines, particularly computers in preparation for the return to school, curtailed the declines.

Imports of other consumer goods were down 2.7% to $4.4 billion, curbing last month's increase. Imports of miscellaneous consumer goods, particularly pharmaceuticals from the European Union, were largely responsible for the decrease.

Energy product imports remained virtually unchanged at $3.2 billion as falling imports of petroleum and coal products offset rising crude petroleum imports. Declining volumes and prices led to the fall in petroleum and coal products, while for crude petroleum volumes rose considerably.

Agricultural and fishing products set a new record high in August, rising 2.1% to $2.1 billion. Record imports of beverages as well as meat and meat preparations were responsible for a large portion of the increase. Imports of corn for use in animal feed and of fish and marine animals, primarily live lobsters, were also strong.

Available on CANSIM: tables 228-0001 to 228-0003, 228-0033, 228-0034, 228-0041 to 228-0043 and 228-0047 to 228-0055.

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

The August 2007 issue of Canadian International Merchandise Trade, Vol. 61, no. 8 (65-001-XIB, free), is now available from the Publications module of our website. 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-XWE, free).

For more information on products and services, contact Sharon Nevins (toll-free 1-800-294-5583; 613-951-9798). To enquire about the concepts, methods or data quality of this release, contact Deborah Sussman (613-951-0284), International Trade Division.

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