- Canada’s trade deficit narrowed to $4.2 billion in January from a record $4.8 billion shortfall in December.
- Lower crude oil prices were behind Canada’s wider trade deficit toward the end of last year. A decent rebound in global and Western Canadian oil prices in January helped boost nominal exports.
- Crude oil export volumes were close to flat in January despite the Alberta government’s mandatory oil production curtailments taking effect in the month. That is consistent with a drawdown in elevated crude inventories.
- Non-energy exports also posted a solid gain in January after slowing toward the end of last year.
- A jump in aircraft imports limited the improvement in the trade deficit. Imports of machinery and equipment were also higher—a positive sign for business investment.
Today’s trade report provides a bit of encouragement. It’s a good reminder that the energy sector’s near-term difficulties, which weighed on growth toward the end of last year, should be largely transitory. Prices have rebounded this year and output should follow as mandatory curtailments are reduced. We also saw some green shoots in non-energy exports, which disappointed toward the end of last year. But let’s not get ahead of ourselves. Canadian exporters are swimming against the tide of a softening global industrial sector, slower global trade growth, and a US manufacturing sector whose growth appears to have peaked last year.
