International Trade

November 2018

Exports plunge on weak energy prices

Canada’s trade picture is deteriorating rapidly as 2018 draws to a close. November saw Canadian exports decline for the fourth consecutive month as weak prices and production cuts drove the value of crude oil deliveries lower.

All told, exports fell by 2.9 per cent compared to October – their biggest month-over-month drop since July 2017. That decline pushed the total value of exports down to $48.3 billion – its lowest level since March and 5.3 per cent below its July peak of $51.0 billion.

Imports were also down again, although the decline was less severe. Canadian consumers paid more for foreign goods but bought fewer of them. Import prices were up by an average of 1.0 per cent in November, but volumes fell by 0.4 per cent. Those effects combined to drive overall imports 0.5 per cent lower, to hit $50.4 billion for the month. Imports into Canada have been trending steadily downward since March.

However, since exports once again fell faster than imports, Canada’s trade deficit widened in November. The silver lining here is that adjustments to October’s trade figures meant that that month’s trade deficit was actually much smaller than first thought. Last month it was reported that Canada posted a $1.2 billion trade deficit in October. That imbalance was adjusted to $851 million, but then expanded to an estimated $2.1 billion in November – Canada’s largest monthly trade deficit since May.

As noted last month, the decline in oil prices is a major concern for Canada’s short-term outlook for export growth and our international trade balance. Canada is a significant net exporter of crude oil and other energy products, while it carries a yawning trade deficit elsewhere. Effectively, the energy sector has been working overtime to minimize the net outflow of cash from the Canadian economy. Further declines in oil prices will only accelerate that outflow.

November’s decline in exports was about more than just oil prices. Although crude oil export prices did fall by more than 13 per cent in November, the impact was compounded by a 4.4 per cent reduction in export volumes as well. At the same time, refined petroleum export prices fell by 4.6 per cent, while volumes were nearly 11 per cent lower compared to October.

Moreover, it wasn’t just energy exports that were weak in November. Export volumes were down for a wide range of goods, including agricultural and forest products, primary metals, motor vehicles and aerospace products. All said, export volumes fell by 1.8 per cent in November, compounded by a 0.8 per cent decline in average export prices.