Canada’s Trade Gap Widens Sharply on Surge in Auto Imports
Canada’s Trade Deficit Widens to C$3.2 Billion on Import Surge
(Bloomberg) -- Canadian trade with the rest of the world surged in June as the global economy rebounded from Covid-19 lockdowns.
Total imports jumped 22%, while exports gained 17%, Statistics Canada said Wednesday in Ottawa. That caused the country’s trade deficit to rise to C$3.2 billion ($2.4 billion) from a revised C$1.3 billion in May, blowing past economist expectations for a C$900 million gap.
The data reflect a rebound in global commerce following Covid-19 lockdowns, returning trade back to more normal levels. That included a sharp pick up in purchases from abroad by Canadian companies and consumers.
The trend is particularly evident in the auto sector, which largely shutdown in April but has come back strongly. Auto imports rose 216%, while exports of motor vehicles and parts also jumped 218%.
“For the moment, the readings on the trade balance will take a back seat to expectations regarding continued progress on two-way trade,” Royce Mendes, an economist at CIBC World Markets, said in a report to investors. “However, with U.S. virus cases surging in parts of the country, the outlook for Canada’s exports has become far more precarious.”
In volume terms, exports rose 10.6% and imports jumped 28.3%. Canada’s trade with the U.S. also rebounded, driven by higher shipments of motor vehicles and parts.
Combined, exports and imports have increased 20% since falling to a decade-low in April, though still well short of pre-pandemic level. Exports remain 18% below February levels, while imports are still down 14%.
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