Data released on Thursday showed the Canadian trade surplus widened to CAD5.0B in June, in line with market expectations. Analysts at CIBC, explained the trade surplus was in somewhat of a holding pattern during June, but should narrow ahead with oil prices having fallen recently.

Key Quotes: 

“Exports of goods increased by 2.0% on the month, with oil leading the way. The 3.7% increase in that area was a reflection of both higher volumes and prices, although given the decline in global oil prices seen recently the value of exports in this area has likely peaked for now. While energy remained a key driver to overall exports, non-energy exports were also up by a solid 1.4% compared with the prior month.”

“The trade deficit in services widened modestly from $1.1bn in May to $1.3bn in June, with imports rising faster than exports. While trade in travel services continues to improve on both the import and export side, the 5.6% increase in imports during June easily outpaced the 2.1% gain in exports and still has much further to go before reattaining prepandemic levels. The wider services deficit broadly offset the larger goods surplus in terms of the overall trade balance.”

“The Canadian trade surplus was in somewhat of a holding pattern during June, but should narrow ahead with oil prices having fallen recently. The revision to May leaves imports rising at a much stronger pace than exports during the second quarter as a whole. While that implies that net trade will be a fairly big negative for GDP growth in isolation, it could also signal a stronger rebuilding of inventories or growth in consumer spending as an offset.”