In a week of mostly downcast economic news, the reduction in Canada’s trade deficit was one positive. Having reached a record of $3.18 billion in March, the deficit in April came down to $2.94 billion, according to data released by Statistics Canada.
The drop offers some hope for Canada’s economy, with financial experts identifying exports as key to the nation overcoming its energy-related woes. Last week StatsCan revealed that the economy contracted in March after a strong start to the year. This was followed by the OECD downgrading its growth prediction for Canada for the rest of the year and the IMF issuing a dire warning about the personal debt situation in the country.
One bright spot this year has been exports, with the auto industry in particular having a strong start to 2016. Bank of Canada Deputy Governor Larry Schembri said last week that manufacturing should overcome weakness in commodity producers and lead export growth next year.
In April, shipments in and out of Canada were up after declining for two straight months. Exports climbed 1.5 percent to $41.8 billion, although that figure is still behind January’s strong $46.1 billion return. Imports meanwhile rose 0.9 percent to $44.7 billion.
Exports outside the beleaguered energy sector rose 0.8 per cent, which represented a climb of 3.9 percent from April 2015.
Industrial machinery, equipment and parts exports rose 10.5 per cent to $2.79 billion, the biggest such increase since March 2001. Gains in the metals and minerals category were curbed by a drop in aircraft shipments.
In cross-border trade, the trade surplus with the US narrowed in April to $1.57 billion, the lowest since 1993, from $1.74 billion a month earlier.
This optimism should be tempered by the fact that May trade could show lower exports, primarily because of the Fort McMurray fire that reduced production by 1 million barrels per day.