Canada: Record high trade deficit in March, good details - NBF

Jocelyn Paquet, analyst at National Bank of Canada, noted the merchandise trade deficit worsened in February to an all-time high, the details of the report were “rather good”. 

Key Quotes:

“Canada’s merchandise trade deficit worsened from C$2.9bn in February to an all-time high of C$4.1bn in March (data goes back to 1988). The larger deficit was due to a 6.0% surge in nominal imports (to a record high C$51.7bn) which dwarfed a 3.7% increase in exports.”

“Even though Canada’s goods deficit widened to a record high in March, the details of the report were rather good. To start with, total trade, i.e. exports plus imports, jumped up C$4.6bn and reached a record high of C$99.3bn.”

“Most of the rise in imports was due to two categories: motor vehicles and parts (+8.3% despite declining prices) and consumer goods (+7.7%). A surge in those segments suggests that consumer demand in Canada was strong in March.”

“It is hard to see trade rebounding without a positive conclusion to the NAFTA renegotiations, especially if one considers the loss of competitiveness suffered by Canadian businesses following the tax reform in the U.S.”