Canada’s Trade Surplus Narrows on Lower Crude Exports to U.S.

(Bloomberg) -- Canada's merchandise trade surplus narrowed in June as the value of crude oil and transportation equipment shipments declined, a weak end to a strong quarter.

The surplus shrank to C$136 million ($103 million), from a revised C$556 million in May, Statistics Canada said Friday in Ottawa. Crude exports fell for the first time this year, declining 8.6%, reflecting a drop in prices.

It was a better result than economists had expected -- the median forecast in a Bloomberg survey was for a deficit of C$300 million. On a quarterly basis, however, export volumes were up the most since 2014.

Website issues at the central statistics agency delayed the release of the data by nearly 30 seconds.

Key Insights

• Friday's report lends credence to the Bank of Canada's view that exports will help the economy recover from an extremely weak period at the end of 2018 and the beginning of this year. That should give it more ammunition to remain on the sidelines while the Federal Reserve cuts rates.
• In June, crude oil export prices fell 13.5%, while volumes rose 5.6%. On a quarterly basis, export volumes -- the variable that goes into calculations of real growth -- rose 4.1%, the most since mid-2014, when global prices started a major decline.
• June, the first full month of data after the Trump administration lifted metals tariffs, saw a 16% increase in steel shipments to the U.S.

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• Exports of aircraft and other transportation equipment and parts fell 25% in June, however on the quarter aircraft exports were up 39%.
• Total imports fell 4.3% on the month.

--With assistance from Erik Hertzberg.

To contact the reporter on this story: Chris Fournier in Ottawa at cfournier3@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Stephen Wicary

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