Canadian Merchandise Exports Extend Gains in June
- Canadian merchandise exports rose 17.1 per cent to $39.7 billion in June, the second straight monthly gain, while imports increased for the first time since the recession, rising at an even faster pace of 21.8 per cent to $42.9 billion.
- The trade deficit widened from $1.3 billion in May to $3.2 billion in June.
- In volume terms, exports and imports were up 10.6 per cent and 28.3 per cent, respectively.
- As in May, the June rebound in exports was led by motor vehicles and parts. Exports were also up in 7 of 10 other major commodity groups.
- Exports to the US also surged for the second straight month, though they were still nearly one-quarter below February 2020 levels.
- The solid rebound in exports over May and June was widely expected. Unfortunately, this will likely be followed by a more uneven and drawn out recovery phase, given the continued threat that COVID-19 poses to the economy.
Sources: CME; Statistics Canada.
EXPORTS POST DOUBLE-DIGIT GROWTH
Canadian merchandise exports rose 17.1 per cent to $39.7 billion in June, extending the 5.6 per cent gain in May. Despite these back-to-back increases, exports were still down 17.9 per cent compared to their pre-pandemic levels in February 2020. Imports increased for the first time since the recession, rising at an even faster pace of 21.8 per cent to $42.9 billion in June. In volume terms, exports and imports were up 10.6 per cent and 28.3 per cent, respectively.
The solid rebound in exports over May and June was widely expected and in line with the gradual reopening of businesses. Unfortunately, this will likely be followed by a more uneven and drawn out recovery phase, given the continued threat that COVID-19 poses to the economy.
TRADE DEFICIT WIDENS TO $3.2 BILLION
With imports outpacing exports, Canada’s trade deficit widened from $1.3 billion in May to $3.2 billion in June. Specifically, Canada’s trade surplus with the US narrowed from $1.9 billion to $1.1 billion, while Canada’s trade deficit with the rest of the world widened from $3.3 billion to $4.3 billion.
EXPORT INCREASE DRIVEN BY MOTOR VEHICLES AND PARTS
The increase in exports was relatively broad-based, spanning 8 of 11 major commodity groups. Motor vehicles and parts exports jumped by more than $4 billion, as June marked the first full month of production at North American auto assembly plants. This increase left motor vehicles and parts exports 16.8 per cent below their February 2020 levels.
Exports of metal and non-metallic mineral products rose $852.5 million in June, led by a big gain in unwrought gold, silver, and platinum group metals. Notable increases were also recorded in metal ores and non-metallic minerals ($256.1 million), chemical, plastic and rubber products ($172.8 million), electronic and electrical equipment and parts ($109.3 million), and energy products ($100.3 million).
On the negative side, exports were down in farm, fishing and intermediate food products (-$124.4 million) and in industrial machinery, equipment and parts (-$35.7 million). Exports of aircraft and other transportation equipment and parts also fell in June, but by a marginal $1.8 million.
EXPORTS TO THE UNITED STATES JUMP NEARLY $5 BILLION
Canadian exports to the US jumped $4.9 billion in June, following a $2 billion increase in May. Despite this substantial rebound, exports to south of the border were still down 23.9 per cent compared to their pre-pandemic levels.
Exports to countries other than the US increased by $884.7 million to $12.2 billion in June, bringing this group’s level very close to what it was in February 2020. Among Canada’s major trading partners, the biggest increase in exports was to the UK, at $825.5 million, mostly on the strength of refined gold. Exports to Mexico also rose last month, up $163.0 million. On the other hand, these gains were partly offset by lower exports to Canada’s remaining major trading partners, most notably a $207.6 million drop in exports to Japan.