Canadian international merchandise trade

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Canada's trade balance with the world contracted to its lowest level since December 1998, as exports declined and imports increased.

Exports decreased 2.3% to $37.7 billion in September, the lowest level since October 2006. Only three sectors—automotive products, energy products, and other consumer goods—recorded gains.

Imports rose 2.2% to $35.1 billion, recapturing some of the loss registered in August. Energy products were by far the prime force behind the rise, followed by industrial goods and materials, automotive products, and other consumer goods.

With imports rising and exports falling, the nation's trade balance with the world narrowed to $2.6 billion, falling to its lowest level since December 1998. The trade surplus with the United States shrank to $6.2 billion.

Canada's trade deficit with countries other than the United States expanded to $3.5 billion. All principal trading areas contributed to the increase, with the exception of Japan, as Canada's trade deficit with Japan decreased.

Between January and September 2007, based on the Bank of Canada's monthly noon spot rate average, the Canadian dollar appreciated 13% against its American counterpart, reaching parity at the end of September.

Exports decrease despite growth in automotive products, energy products, and other consumer goods

Sharp declines in exports of machinery and equipment, and industrial goods and materials, the two most important sectors in terms of value, overshadowed gains in automotive products, energy products, and other consumer goods.

Exports of machinery and equipment tumbled 7.2% to $7.6 billion, their lowest level since May 2006, completely reversing the gains achieved in August. Aircraft and other transportation equipment were solely responsible for the declines, plummeting 31.5% to $1.4 billion, reaching their lowest level since January 2000.

Industrial goods and materials contracted 3.6% to $8.4 billion. Metal ores, in particular nickel, plunged for the second month in a row, following record levels in July. Prices for base metals were dampened by weakness in the American housing market.

Forestry products fell 7.4% to $2.2 billion, the sixth consecutive monthly drop. Declines were widespread, led by lumber and sawmill products, which shrank 9.2% as prices continued to fall.

Exports of agricultural and fishing products declined 3.6% to $2.9 billion, as wheat plunged 27.4%. These declines were offset by soaring exports of barley to various destinations.

Automotive products climbed 2.3% to $6.3 billion, slightly above levels recorded a year ago. This increase was largely attributable to passenger autos, which surged 6.8%, and trucks and other motor vehicles, which increased 1.0%. Motor vehicle parts fell for the second consecutive month, dipping below $2 billion for the first time since February 2001.

Gains in crude petroleum and other energy products, primarily petroleum and coal, offset declines in natural gas, boosting exports of energy products 1.2% to $7.6 billion. The jump in exports of crude petroleum stemmed from a rise in volume as prices declined slightly. The increase in petroleum and coal products reflected an increase in price and volume.

Following August's decrease, exports of other consumer goods advanced 3.0% to $1.6 billion, reflecting increased exports of pharmaceutical products now manufactured in Canada.

Energy products fuel imports

Imports recovered somewhat in September from the declines observed in August, as the Canadian dollar continued to gain ground. Higher imports of energy products, industrial goods and materials, automotive products, and other consumer goods more than compensated for the declines registered by the three remaining sectors.

Energy products led the expansion in imports in September, accounting for more than half of the increase. Imports in this sector soared 13.5% to reach $3.4 billion, their highest level in 2007, and just shy of the record high achieved in August 2006. Petroleum and coal products, crude petroleum, and to a lesser extent coal and other related products, drove the increase. The increase of crude petroleum, and petroleum and coal products was due almost entirely to volume. Strong gasoline demand, refinery shutdowns for maintenance and upgrades, and the preparation for the upcoming winter heating season were among the factors contributing to the growth.

Imports of industrial goods and materials rose 2.6% to $7.2 billion, their highest level since February. Metals and metal ores were the sole source of the growth in the sector, rising 10.8% to $2.5 billion on the strength of precious metals and alloys.

Following August's decline, automotive products rose 1.6% to $6.7 billion, reaching levels slightly higher than those in September 2006. Motor vehicle parts increased 6.5%, while trucks and other motor vehicles grew 3.8%. Passenger autos declined for the second month in a row, falling 6.0% to $2.1 billion.

Machinery and equipment fell 1.9% to $9.6 billion. Aircraft and other transportation equipment were responsible for almost the entire decline, falling 13.9% to $1.3 billion. Despite the second consecutive monthly decrease since peaking in July, aircraft and other transportation equipment remained strong in comparison to previous years.

Agricultural and fishing products dipped 0.5% to $2.1 billion, following a record high in August. Declines in fish and marine animals, meat, and tobacco imports offset record imports of beverages, cocoa and coffee, and animal feed. Imports of corn and other ingredients for animal feed have been on the rise in recent months.

Snapshot of emerging markets: Russia

Over the past several years, Russia has been growing in importance as a trading partner. In 2006, Canada's total merchandise trade with Russia amounted to $2.3 billion, more than twice the value of a decade earlier.

During the first nine months of 2007, exports to Russia were valued at $875.9 million, a 37.6% increase over the same period in 2006. Imports from Russia amounted to $1.1 billion, virtually unchanged from the same period in 2006.

The products in highest demand from Russia were crude petroleum, precious metals, and fertilizers. Imports of these three commodities were valued at $761 million in the first three quarters of 2007, with crude petroleum accounting for 87.4% of that value.

In contrast, manufactured goods dominated Canadian exports to Russia. In the first nine months of 2007, Canada's top exports to Russia were industrial and agricultural machinery, followed by fresh, chilled and frozen meat. Together, these commodities were valued at $241.5 million, with machinery accounting for two thirds of that value.

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 September 2007 issue of Canadian International Merchandise Trade, Vol. 61, no. 9 (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 Anne Couillard (613-951-6867), International Trade Division.

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