Canada’s merchandise trade deficit narrowed in January as oil prices rebounded at the start of the year, though the gap remains close to record levels.
The nation posted a $4.3 billion trade shortfall on the month, down from December’s record high gap of $4.8 billion, Statistics Canada told Bloomberg News on Wednesday. Until December, Canada had never recorded deficits exceeding $4 billion. The monthly trade gap has averaged about $2 billion over the past four years.
The rapid deterioration in Canada’s trade picture reflects both plunging oil exports as crude prices collapsed at the end of last year, as well as stagnant exports in the non-energy sector since mid-2018. While Canada’s total exports jumped 2.9 per cent in January as oil prices rebounded, the increase marks just the first rise in Canada’s shipments abroad since July.
Exports are still down 7.3 per cent from record highs in July.
A 37 per cent increase in the value of oil shipments drove the rebound in exports in January. The gain was almost entirely due to rising prices. In volume terms, crude exports were little changed.
Total export volumes — including all sectors — recorded a 0.9 per cent gain in January.
Imports into Canada rose by 1.5 per cent in January, with all the gains reflecting increased volume.
Economists anticipated a sharper narrowing in the trade deficit in January, forecasting a decline to $3.6 billion.