OTTAWA: Trade deficit of Canada broadened in the month of September, mainly due to a one-time large special import transaction. The deficit widened to CAD 4.1 billion from the deficit of CAD 2 billion in August. Canada’s nominal trade exports were up 0.1 percent in spite of a 0.8 percent drop in the volume. Nominal imports grew 4.7 percent in September, with volumes growing 2.3 percent.
Canada’s imports were stimulated to a record CAD 47.6 billion in September, owing to the one-off transaction, which was due to the importation of a huge module that was intended for the Hebron offshore oil projection in Newfoundland and Labrador from South Korea, noted TD Economics. Meanwhile, strong growth in aircraft and other transportation equipment and parts mainly contributed to the September export gains. Exports of energy increased for the seventh straight month, growing 1.8 percent in September. Other than the one-off import transactions, imports indicated wide drops in September. Aircraft and other transportation and parts imports dropped 13.7 percent, whereas that of motor vehicles and parts reversed the prior month’s gains by declining 2.6 percent in September.
The nation’s trade surplus with the U.S. remained broadly unchanged from August, increasing slightly to CAD 2.7 billion. The Canada’s trade report for September continues to be in line with the outlook that the nation’s economy is expected to grow 3 percent in the September quarter, mainly due to the strong performance of export in July, added TD Economics. But after a soft growth in August, the contraction in export volumes in the month of September implies a comparatively weak handoff for exports in the fourth quarter, stated TD Economics.
Exports of Canada have showed certain signs of bolstering in the third quarter following a weak first half of 2016. However, the performance of Canada’s exports is expected to continue to disappoint in spite of the loonie’s depreciation, according to TD Economics. The Bank of Canada, during its October MPR, had revised down its growth outlook. This was predominantly because of an expectation that subdued foreign demand, ongoing competitiveness challenges for Canadian companies and less favorable composition of U.S. growth would continue to be significant headwinds on exports of Canada.
