Daily Economic Comment - Trade Numbers Fail to Impress
Posted By: Will van ‘t Veld Economist, ATB Financial Apr 12, 2012
It was hoped that international trade would pick up to help offset an expected slowdown in economic growth resulting from government spending cuts and eventual reduced construction activity in the GTA. Today’s merchandise trade numbers might have thrown a little cold water on that hope.
Since the recession hit, Canada has only recorded three non-consecutive months of positive merchandise trade, with December 2011 being the most recent month in positive territory. The data released today shows national merchandise trade to be once again deep in negative territory, with Canada importing $2.8 billion more than it sold to the rest of the world in February 2012.
The high cost of crude is likely one of the causes of the weakening trade numbers. This might sound counter-intuitive, but half of the country has to import crude at a world price that has recently surged much higher than the price at which the other half of the country is selling crude into the North American market for. The high Canadian dollar is also not helping, as it not only hurts exports, but it also means domestic market share is harder to keep.
Thanks to energy, Alberta nearly always reports a trade surplus, with Alberta recording a net surplus of $5.5 billion in February. A noteworthy trend on imports has been the surge of imported goods destined for the oilsands; machinery & equipment imports slowed slightly in February, to $741 million, but overall the average level is currently higher than during the peak boom years.
Too much shouldn’t be read into one month’s worth of data, but Canada can’t keep posting trade deficits indefinitely before it’s raised as a serious concern.