Canada's Economy Unexpectedly Posts Trade Surplus on Import Drop

(Bloomberg) -- Canada’s economy recorded a trade surplus for the first time since December 2016, largely driven by falling imports.

The nation posted a C$526 million ($407 million) surplus in August, its first since December 2016, Statistics Canada reported in Ottawa. The move into surplus was due to a 2.5 percent drop in imports. Exports also fell by 1.1 percent.

The trade picture in August is consistent with what the economy has seen in recent months -- an improving trade balance driven largely by fewer purchases of goods from abroad. Canada’s trade deficit in July was just C$189 million, but the gap had reached as high as C$4.1 billion earlier this year.

The drop in imports is reflecting in part tariffs imposed by Canada on U.S. goods this summer, in retaliation for U.S. tariffs on steel and aluminum.

Despite the export decline in August, Canadian shipments of goods abroad have actually seen an improvement this year from a lackluster performance in 2017.

Other Highlights

• In volume terms, which strip out price gains, exports fell 0.7 percent and imports declined by 1.5 percent
• Economists surveyed by Bloomberg News were anticipating a deficit of C$500 million in August
• Canada’s trade surplus with the U.S. was unchanged at C$5.35 billion
• The decline in imports was led by a 28 percent drop in purchase of aircraft-related products
• Consumer-good imports recorded a 3.7 percent drop

--With assistance from Erik Hertzberg.

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Stephen Wicary

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