Canada Exports, Imports Decline Markedly in January
By Paul Vieira
OTTAWA -- Canadian exports and imports fell sharply in January, continuing a lackluster run of indicators for an economy on edge due to heightened trade-policy uncertainty.
Canada's merchandise trade deficit in January narrowed from the previous month to a seasonally adjusted 1.91 billion Canadian dollars ($1.47 billion), Statistics Canada said Wednesday. The deficit came in better than the market consensus for a C$2.5 billion shortfall, according to economists at Royal Bank of Canada. The trade deficit for December was revised slightly lower, to C$3.05 billion.
The narrower trade deficit in January, however, was due to a steep deterioration in imports.
After hitting a record level in the previous month, imports plunged 4.3% in January to C$47.75 billion, with declines in all components tracked. Exports, meanwhile, fell 2.1% to C$45.84 billion, also on broad-based decreases.
On a price-adjusted, or volume, basis, imports fell 3.9%. Export volumes, meanwhile, dropped 3.6% -- the biggest such decline in four years, the data agency said.
Exports to the U.S. fell 2.9% in January. As a result, U.S.-bound exports fell 2.3% on a year-over-year basis, or the first time that metric has gone negative since September, 2016. There has been disappointment in some quarters Canadian exports have not performed better given the stronger U.S. economy.
On a one-year basis, total Canadian exports fell 1.5% in January, while nonenergy exports declined a further 3.2%.
"The only good thing to say about this report is that the value of the monthly trade deficit narrowed," said Derek Holt, economist at Bank of Nova Scotia. "Everything else about the report tends to be discouraging."
President Donald Trump has complained about America's trading relationship with Canada, and how the country is not treated fairly. The U.S., Canada and Mexico are engaged in talks to revamp the North American Free Trade Agreement in an effort to address Trump administration complaints with the pact.
Also on Wednesday, the U.S. released its January trade report. The U.S. trade gap in goods and services expanded 5.0% from the prior month to a seasonally adjusted $56.60 billion in January, according to the Commerce Department. That was a fresh postrecession record.
Canada's monthly trade report covers the purchase and sale of goods and, unlike the U.S. data, does not incorporate services.
The trade report comes at a tumultuous time for the Canadian economy, which grew 3% in 2017 after a sizzling first half of last year. Economic output has slowed markedly, with the third and fourth quarters of last year posting sub-2% annualized growth.
U.S. Trade Representative Robert Lighthizer said this week Nafta negotiators have a month to a month and a half to get an agreement in principle before talks threatened to stall over presidential elections in Mexico and then midterms in the U.S. Mr. Lighthizer added the talks have yet to show meaningful progress on the Trump administration's demands to rebalance the pact on terms more favorable to the U.S.
Now, the U.S. has roiled the global trade outlook with a pledge to levy tariffs on all steel and aluminum imports, including from Canada. Canada -- the largest foreign supplier of steel and aluminum to the U.S. -- has vowed to retaliate should the U.S. proceed with tariffs.
In addition, there are widespread concerns in Canada that business investment will take a hit, due to depressed prices for heavy western Canadian crude oil and deep cuts to U.S. corporate tax rates that suddenly make the U.S. a more attractive investment destination compared to Canada on a tax basis.
Write to Paul Vieira at email@example.com
(END) Dow Jones Newswires
March 07, 2018 09:54 ET (14:54 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.