Canadian international merchandise trade

Statscan - Canada's merchandise trade surplus with the world expanded by more than $2 billion in February, in the wake of increases in all export sectors combined with a decrease in imports.

Canadian companies exported $39.3 billion worth of merchandise, up 3.8% from January and the second consecutive monthly increase. In terms of constant dollars, a method used to isolate volume changes, prices remained flat, while export volumes rose 3.8%.

At the same time, the value of merchandise imports fell 2.0% to $34.4 billion, the first decrease since October 2007. In constant dollar terms, prices fell 1.2% while volumes also declined 0.8%.

As a result, Canada's trade surplus with the world jumped to $4.9 billion from a revised $2.8 billion in January. This was the largest monthly surplus since May 2007.

The trade surplus with the United States soared to $8.1 billion, the biggest surplus in more than one year. Exports to the United States increased by 3.6%, while imports from the United States fell 3.4%.

The trade deficit with countries other than the United States narrowed for the second straight month, falling to $3.2 billion, resulting from increased exports to Japan and the European Union, particularly the Netherlands and Italy.

Exports remain strong amid increases across all sectors

Exports continued to rise in February in the wake of increases in all sectors, reaching its highest level since May 2007. Automotive products and energy products combined represented almost two-thirds of the rise.

Automotive products climbed 11.4% to $5.6 billion, its biggest gain since December 2006. The growth was largely powered by passenger autos, which accounted for nearly three-quarters of the increase as production resumed following widespread temporary shutdowns in January. Both motor vehicle parts, and trucks and other motor vehicles posted gains of 5.0% and 7.4% respectively. Despite this increase, this sector's exports have been on a downward trend since December 2006.

Energy products gained ground for the fourth month in a row, rising 3.8% to a record $9.7 billion. Exports of crude petroleum also reached record levels for the fourth month in a row, zeroing in on the $5 billion mark, with an increase in volume as prices fell. Natural gas increased for the third month in a row, rising 5.5% to $2.7 billion. This increase was entirely attributable to rising prices. By contrast, lower exports of petroleum and coal products, electricity, and coal dampened exports of other energy products, which dropped 4.0% to $2.1 billion, reflecting a fall in both prices and volumes.

Exports of industrial goods and materials increased for the second month in a row, rising 2.8% to $8.9 billion. Exports of metals and alloys hit record levels, buoyed by precious metals, in particular gold, whose price hit an historic high in February. Meanwhile, metal ores grew 12.8% largely as a result of record exports of iron ores, concentrates and scrap. By contrast, chemicals and plastics declined 4.3% to $2.7 billion, for the most part the result of falling exports of inorganic chemicals.

Exports of machinery and equipment rose 1.5% to $7.5 billion. Rising exports of aircraft and other transportation equipment accounted for the bulk of the gain, rebounding after two months of decline.

Forestry products increased 3.9% to $2.2 billion, the first rise in 11 months. Wood pulp and other wood products, primarily to China and Japan, contributed to the increase. Newsprint and other paper and paperboard rose for the third month in a row following eight monthly declines.

Agricultural and fishing products rose 1.0% to a high of $3.1 billion, nourished by record high exports of canola. This record is the culmination of four straight months of growth, during which time exports have more than tripled in value as demand for canola grows as an input into the production of cooking oil and ethanol.

Energy products drag down imports

Despite growth in industrial goods and materials and automotive products, the majority of import sectors lost ground in February, dragged down by widespread declines in energy products.

Energy products plunged 19.7% to $3.4 billion, ending a string of three increases. Other energy products decreased dramatically, as both petroleum and coal products and coal and other related products plummeted, erasing gains realized over the previous two months. Although both volume and price declined, the volume decrease was far greater. Crude petroleum fell 8.8% to $2.4 billion, as the drop in volume offset the price increase.

Machinery and equipment geared down 0.6% to $9.5 billion. This sector has been drifting downward following a peak in July 2007. Industrial and agricultural machinery led the decline, dropping 4.7% to $2.5 billion, driven by falling imports of excavating machinery. By contrast, aircraft and other transportation equipment increased for the third month in a row, jumping 11.1%, as imports of aircraft, engines and parts soared.

Automotive products advanced 2.7% to $6.3 billion, led by motor vehicle parts. Motor vehicle parts increased for the second month in a row, rising 4.6% to $2.7 billion. These recent increases followed a nine-month downward trend that left imports of these commodities at just over half of the record level set in December 1999. Trucks and other motor vehicles gained 2.9% to $1.4 billion, slightly lower than the peak reached in November 2007. Passenger autos edged up 0.4% to $2.2 billion — the second increase in a row.

Industrial goods and materials rose 1.1% to $7.1 billion. The sector has been rising due to strong growth in metals and metal ores, which reached a record level in February. Among the key contributors, precious metals nearly doubled in value since August 2007 as a result of a combination of price and volume increases. Chemicals and plastics inched up 0.4% to $2.3 billion, as increased imports of organic chemicals offset decreases in plastic materials and other chemicals and related products.

Note to readers

Merchandise trade is one component of the current account of Canada's balance of payments, which also includes trade in services, investment income, transfers, capital and financial flows.

International merchandise trade data by country are available on both a balance of payments and a customs basis for the United States, Japan and the United Kingdom. Trade data for all other individual countries are available on a customs basis only. Balance of payments data are derived from customs data by making adjustments for items such as valuation, coverage, timing and residency. These adjustments are made to conform to the concepts and definitions of the Canadian System of National Accounts.

Constant dollars referred to in the text are calculated using the Paasche Price indices.

At the end of each quarter, The Daily includes a section describing trends and topics of interest relating to Canadian international merchandise trade. This section typically discusses data presented on a customs basis and not seasonally adjusted.

Revisions

In general, merchandise trade data are revised on an ongoing basis for each month of the current year. Current year revisions are reflected in both the customs and balance of payments based data.

Beginning with the January 2008 reference month, revisions to the previous year's customs and balance of payments data are published with the release of the January, February and March data months. Subsequently, revisions to customs based data for the previous year will continue to be released on a quarterly basis. Revisions to balance of payments based data for the three previous years will be available when the April reference month is released, on June 10, 2008.

Factors influencing revisions include late receipt of import and export documentation, incorrect information on customs forms, replacement of estimates with actual figures, changes in classification of merchandise based on more current information, and changes to seasonal adjustment factors.

Revised data are available in the appropriate CANSIM tables.