Canada’s merchandise trade deficit narrowed to $4.2 billion in January from a record $4.8 billion shortfall in December.
The trade deficit in January was the second largest on record.
Oil prices rebounded in January and this of course boosted nominal exports. In January nominal exports expanded 2.9%, the first increase since July, while imports advanced 1.5% led by aircraft purchases.
As the table below illustrates, the ebb and flow in the energy trade surplus heavily impacts Canada’s merchandise trade figures.
Canada’s energy trade surplus slipped to a three year low of $3.1 billion in December but rose back up to $4.3 billion as of January. Nonetheless Canada’s energy trade surplus was still significantly lower than it was in October, when Canada’s total trade was almost in balance.
The non-energy trade deficit, for its part, widened from $7.9 billion in December to $8.6 billion in January. Because of higher oil prices, Canada’s terms of trade (export prices ÷ import prices) improved for the first time in six months in January.
71.5% of Canada’s goods exports were sent to the United States in January. Exports to the US. rose by 1.1% while imports edged up by 1.8%. Canada’s trade surplus with the US shrank to $1.56 billion in January from $1.77 billion in December.
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