Thursday, June 6, 2019 - 11:48

MNI DATA IMPACT: Canada Trade Improvement Not as Good as Gold

By Greg Quinn

OTTAWA (MNI) - Canada's shrinking April trade deficit adds to evidence of faster economic growth in the second quarter, a boost that may not last amid signs the U.S. is escalating tensions with Mexico and China.

Statistics Canada said the April deficit of C$966 million was the smallest in six months, and it also pared the March estimate to C$2.3 billion from C$3.2 billion. The economist consensus for April was for a C$2.8 billion shortfall.

Here are some of the key takeaways from the data released Thursday:

- The export rise of 1.3% was slower than March's 4.4% increase, and was led by a surprise jump in gold sales to overseas banks that will be hard to sustain in future reports. Energy exports fell 0.5% as natural gas prices tumbled, while non-energy exports climbed 1.8%.

- Imports fell 1.4% in April, and like exports the details suggested one-time factors that may not shrink the trade deficit from here. Both aircraft and pharmaceutical imports dropped on the month from record highs set earlier this year.

- The smaller trade deficit still means that second-quarter economic growth will quicken to an annualized pace of at least 2%, economists estimate. That will improve on first-quarter growth of 0.4% that was blunted by foreign trade. The trade gain also supports the Bank of Canada's view given when it held its benchmark rate at 1.75% on May 29 that the economy was picking up speed. The BOC has estimated second-quarter growth at 1.3%.

- Canadian exporters face obstacles beyond April. The U.S. is threatening to impose trade sanctions on Mexico, something that could delay ratification of a new trade deal between those two nations and Canada. Trade relations between Canada and China have suffered since the arrest of a business leader in Vancouver, and the April report showed canola exports to China have sunk to zero.

- Another soft spot is Canada's year-to-date trade deficit of C$10.2 billion, the second largest on record after the C$10.9 billion record set in 2016.

--MNI Ottawa Bureau; +1 613-314-9647; email:
--MNI Washington Bureau; tel: +1 202-371-2121; email:


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