Record surge in imports signals supply chokehold is easing

Canada's imports rose to a record in March, helped by a rush of consumer goods from China and vehicles and automobile parts from the United States and Mexico, suggesting the supply bottlenecks that have plagued the global economy for the better part of two years have begun to loosen.

Statistics Canada's reported April 4 that imports jumped 7.7 per cent in March from February, the second consecutive gain. The biggest contributor to the increase was a 40-per-cent surge in the value of oil imports, as prices skyrocketed in the aftermath of Russia's invasion of Ukraine, and Canadian importers sought to stockpile crude from the U.S., Saudi Arabia, and Nigeria.

But Statistics Canada's tally also showed big increases of imports of automobiles and parts, suggesting the global chip shortage that had slowed North American automobile production was becoming a gentler headwind. Imports from countries other than the U.S. rose to a record, led by a 29-per-cent increase in shipments of computers, cellphones, industrial equipment, and consumer goods from China.

A more fluid supply of goods would ease inflationary pressures that have pushed year-over-year increases in the consumer price index to their highest levels in more than three decades. The Bank of Canada accelerated its path to higher interest rates last month, lifting its benchmark interest rate a half point after the latest update of its economic outlook showed that demand was well ahead of supply.

“The easing of supply chain issues could be a sign of better things to come for auto production and the manufacturing sector,” Benjamin Reitzes, an economist at Bank of Montreal, said in a note.

To be sure, the global trade environment remains far from normal.

Canadian exports also surged to a record, as the country's oil producers, miners, and farmers benefited from higher commodity prices. Exports rose some six per cent, with energy accounting for more than half the gain, Statistics Canada said. Exports of metal ores and non-metallic minerals rose to a record, led by a 22.5-per-cent increase in shipments abroad of potash, as farmers worldwide scrambled to replace fertilizer they would normally source from Russia and Ukraine.

Imports (money out) grew faster than exports (money in) in the first quarter, so trade will be a negative when StatCan tallies gross domestic product.