Canada's merchandise trade deficit hits record in June
Canada's trade deficit widened in June to a record $3.6 billion, up from $3.5 billion in May, Statistics Canada reported Friday.
The country's imports for the month increased 0.8 per cent to $45.0 billion while exports increased 0.6 per cent to $41.4 billion.
- Canada sheds 31,200 jobs in July, unemployment rate rises to 6.9%
- U.S. economy added 255,000 jobs in July
Imports from the United States, our biggest trading partner, were up 1.5 per cent to $29.8 billion and exports were down 1.2 per cent to $31.6 billion. As a result, Canada's trade surplus with the United States narrowed from $2.6 billion in May to $1.8 billion in June.
For the April-June quarter, Canada's trade deficit with the world widened from $6.4 billion in the first quarter of 2016 to a record $10.7 billion.
Economists suggest the trade numbers point to a weaker second-quarter gross domestic product than expected by the Bank of Canada.
"[The second quarter] is looking quite soft on the back of these numbers," Scotiabank Economics said in a commentary.
TD economists called the trade data "disappointing" and noted that it was the fifth consecutive month of declines in export volumes.
"While some of this can be put down to weak energy exports given the disruptions in that sector, the more concerning trend is the ongoing weakness in non-commodity exports," wrote TD economist Brian DePratto in a note. "With export growth in these sectors failing to materialize, the ongoing rotation of Canadian economic growth appears to have stalled in the first half of this year."
The poor trade figures, coupled with the loss of 31,200 jobs in July, led to suggestions the Canadian economy may need some more stimulus.
"Canada is counting on the export sector to step up to the plate and this is another month where we just
didn't see it," Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce, told Bloomberg.
"If that doesn't turn by the end of the year we could be looking for another dose of stimulus, preferably fiscal
stimulus rather than throwing more fire on a housing bubble with lower rates," Shenfeld said.