Trade deficit doubles on weak oil price, lower demand for chemicals
January 9, 2019
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Canada’s trade deficit more than doubled in November as exports declined for a fourth month in a row, dragged down by weak prices for crude oil and lower demand for chemicals, Statistics Canada said this week.
The deficit jumped to $2.06 billion from a revised $851 million in October. Analysts polled by Reuters had expected a shortfall of $1.95 billion.
“It’s really not a great news month,” Export Development Canada chief economist, Peter Hall, said in a phone interview with Reuters.
Exports fell 2.9 per cent as the value of crude shipped abroad plunged 17.7 per cent on lower prices. The Bank of Canada has expressed concern over the impact of slumping revenues from the nation’s major export, oil.
Exports of basic and industrial chemical, plastic and rubber products dropped 7.5 per cent as shipments of lubricants and other refinery petroleum products slumped by 26.4 per cent on lower U.S. demand.
Hall said the state of industrial chemical exports was a gauge of how the economy was doing in the United States, which takes about three quarters of all Canadian exports.
“Purchasing managers in the United States remain upbeat but for some reason they’re not buying those key inputs to the industrial process. So we’re scratching our heads a little bit on that one,” he said.
Governor Stephen Poloz stressed that the pace of monetary policy tightening will rely heavily on economic data.
Fotios Raptis, senior economist at TD Economics, said mandatory oil production cuts in Alberta and slowing growth in foreign demand were “likely to continue to weigh on Canadian exports and economic growth in the months ahead.”
Imports also put in a largely unimpressive performance, dropping by 0.5 per cent in November. Imports of motor vehicles and parts dipped 2.8 per cent as demand for passenger cars and light trucks weakened for the ninth time in 12 months.
Imports of metal ores and non-metallic minerals slumped 18.6 per cent in November, continuing their decline from a record high in September.