Canada's trade gap narrows in October on petroleum, canola exports
Imports shrank 1.6% and exports expanded across almost all sectors
Canada's trade deficit narrowed in October to $1.5 billion, a big decline after hitting a revised $3.4 billion the previous month, Statistics Canada reported Tuesday.
Exports rose across almost all sectors to $44.5 billion after shrinking for the past four months.
Especially strong was the rise in energy exports, primarily to the U.S. Exports of gasoline blending stock were up 44.5 per cent and diesel and fuel oils exports rose 18.4 per cent after a recent drawdown in U.S. inventories of refined petroleum products.
Higher exports of canola seed and canola oil helped boost exports of farm, fishing and intermediate food products by 7.7 per cent to $2.8 billion.
Imports fell 1.6%
At the same time, there was a 1.6 per cent decrease in imports to $45.9 billion.
One big factor causing imports to drop was the CAMI automotive strike, now over, which contributed to an 8.1 per cent drop in motor vehicles and parts.
Canada's trade surplus with the United States widened from $2 billion in September to $3.5 billion in October.
TD economist Dina Ignjatovic said the Bank of Canada is likely to look on the growth of exports as a positive sign for Canada's fourth quarter growth.
A healthy U.S. economy and a Canadian dollar hovering around the 80 US cent mark are helping the export sector, she said in a note to clients.
NAFTA wildcard on trade
"Of course the NAFTA renegotiations remain a wildcard, but given the slow progress to date, any changes are unlikely to take effect within the next year," she wrote.
But Scotiabank's Derek Holt is worried the reduction in imports is a sign of weakening business investment.
"Since Canada imports the majority of its capital goods, the leading indicator for investment spending comes from the import figures," he wrote in a note to clients. "Imports of industrial machinery fell by 1.9 per cent month over month in value terms and declined for the third time in four months."