Canada posts trade surplus for January

BMO economist Shelly Kaushik said exports were supported by rising energy prices, which partially offset weakness in auto production

Canada posted a merchandise trade surplus in January compared with a deficit in December as imports fell to start the year.

Statistics Canada said Tuesday the country saw a merchandise trade surplus of $2.6 billion for January compared with a revised deficit of $1.6 billion in December.

BMO economist Shelly Kaushik said exports were supported by rising energy prices, which partially offset weakness in auto production from ongoing supply chain disruptions.

“Widespread inflation continues to play a role as export and import volumes were weaker than the headlines,” Kaushik wrote in a report. “Looking ahead, we expect red-hot energy prices will continue to buoy exports, with minimal direct impact expected from the sanctions against Russia.”

In real or volume terms, total imports fell 8.5 per cent in January, while exports posted a 4.6 per cent drop by volume.

The swing back into surplus after the deficit to end 2021 came as total imports fell 7.4 per cent to $54 billion.

Imports of motor vehicles and parts dropped 13.9 per cent in January as imports of passenger cars and light trucks fell 12.4 per cent. Imports of engines and parts decreased 15.4 per cent.

Meanwhile, total exports edged down 0.2 per cent to $56.6 billion as exports of motor vehicles and parts fell 9.6 per cent.

Excluding energy products, exports fell 2.7 per cent.

Regionally, Statistics Canada said the move back to a trade surplus came as the country posted its largest surplus with the United States since July 2008. Canada’s trade surplus with its largest trading partner came it at $9.3 billion for January compared with $7.1 billion in December.

Meanwhile, Canada’s trade deficit with countries other than the United States narrowed to $6.7 billion in January compared with $8.6 billion in December.

On the services side of the equation, Canada’s monthly international trade in services deficit increased to $314 million in January compared with $172 million in December.

Exports of services fell 4.0 per cent to $11.6 billion, while imports dropped 2.8 per cent to $11.9 billion.