The trade surplus widened in September but less than expected in Canada. Analysts at CIBC point out that for the third quarter as a whole, inflation-adjusted exports were up 13.7% annualized while imports were down 3%, and as such goods trade will have made a healthy contribution to GDP growth during the quarter. 

Key Quotes: 

“The goods trade surplus surprisingly widened in September, albeit from a downwardly revised level in the prior month. As a result, the $1.14bn surplus (from a revised $0.55bn in the prior month) was actually very close to the $1.2bn expected by the consensus. When combined with trade in services, Canada remained in a deficit position for a second consecutive month, albeit a slimmer one than was seen in August.”

“Net trade will be a large positive contributor to GDP in Q3, and given the rise in agricultural exports towards the end of the quarter and prospect for more to come, export growth should remain solid in Q4 as well. While a slower global economy will weigh on trade in some areas, Canadian exports should fare better than in previous instances of weakening global demand.”

“The war in Ukraine and sanctions on Russia have increased demand for some Canadian exports (wheat, potash etc) while an easing in global supply chain disruptions could be a positive for export areas that failed to benefit fully from the initial, strong, post-Covid recovery (i.e. autos).”