Canada's merchandise trade surplus with the world expanded for the third consecutive month in March as exports grew and imports declined.

The trade surplus with the world jumped to $5.5 billion, its highest level since May 2007.

Exports to the United States climbed for the third month in a row while imports from Canada's southern neighbour decreased. Consequently, the trade surplus with the United States rose to $8.6 billion, the highest level since April 2006.


The trade deficit with countries other than the United States fell to $3.1 billion, contracting for the third straight month with exports increasing at a much faster pace than imports. Increased exports to Mexico and Norway contributed to the monthly rise.

Energy products boost exports

Canada's exports rose for the third consecutive month, increasing 1.6% to $40.1 billion in March, largely on the strength of energy products. The growth in exports overall was principally attributable to a rise in prices as volumes generally declined. Export prices have been on the rise since October 2007.

Increasing since October 2007, energy products surpassed the $10-billion mark for the first time ever, rising 6.6%. Price hikes for natural gas and crude petroleum, combined with a volume jump in petroleum and coal products, contributed to the increase.

Contributing to a lesser degree to the growth in exports, other consumer goods rose 13.4%. These have been on a downward trend since December 2006. Commodities such as pharmaceutical, household products, toys, sporting goods, apparel and footwear are grouped in this category. Typically, pharmaceutical products are the main contributor to the volatility of this sector.

The only export sectors to falter were automotive and forestry products. After recording only five increases in the past 15 months, automotive products slid to $5.3 billion. Trucks and other motor vehicles exports plummeted 29.9% to their lowest level in almost two decades, affected by labour disruptions in the United States.

As demand from the United States remained sluggish, forestry products fell 7.7%, continuing its decline that began in 2004. Exports of lumber and sawmill products fell to their lowest level since July 1992 as the American housing market continued to deteriorate.

Automotive products drag down imports

Imports slipped 0.3% to $34.5 billion in March, in the wake of widespread declines in all sectors except energy. Overall, declining import volumes outweighed the rise in prices. Automotive products posted its largest monthly decrease since August 2003, falling 11.4%, as the industry was faced with a labour dispute in the American motor vehicle parts supply chain.

Energy products, the only sector to register a gain, soared 17.6%. It has been trending upwards since October 2007. A jump in volumes of natural gas was largely responsible for this increase as Canadian inventories were re-established.

Crude petroleum imports rose 8.5% to yet another record, due to the combined impact of volume and price increases in March. Since 2003, prices have been the main driving force behind the growth of crude petroleum imports while volumes have remained relatively stable.

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.

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. Revisions to customs based data for the previous year are released on a quarterly basis. Revisions to balance of payments based data for the three previous years will be available with the April reference month 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.