Canada kicked off 2017 with a third-straight monthly trade surplus — the first time that has happened since 2014 — due in large part to stronger sales of motor vehicles and from the agri-food sector, Statistics Canada (StatsCan) reported on Tuesday.
Canada’s merchandise trade balance with the world widened to $807 million in January as exports increased by 0.5% to hit a record $46.5 billion, StatsCan says.
Although the 0.5% increase for January, on its own, was decent it’s “great news” when viewed in the context of the solid growth the economy has seen in recent months, says Peter Hall, chief economist with Export Development Canada.
“The auto sector is blockbuster in the U.S., so the sales levels are about as high as they ever get,” he says.
On top of motor-vehicle exports, which saw a gain of 7.7% in January, Hall also underlines the recent strength in sales of farm, fishing and food products.
The agri-food industry saw a 12.8% gain, including a 38.4% boost in canola exports to China. StatsCan reports that canola sales to China have more than doubled since October after the two countries agreed to end a lingering dispute over exports of the crop by 2020.
The overall agri-food sector holds a lot of promise for Canada, Hall says: “It’s just on a surge. We honestly believe that there is more from where this comes from.”
The StatsCan report says the January trade gains were offset in part by decreases in the exports of consumer goods as well as metal and non-metallic mineral products. In all, there were declines in six out of 11 categories.
In January, Canada’s exports to the U.S. rose by 2.3%, while imports from its neighbour increased by 0.3%. As a result, Canada’s trade surplus with the U.S. grew to $4.5 billion in January from $3.8 billion in December 2016.
Dina Ignjatovic, an economist with Toronto-Dominion Bank, wrote in a research note to clients on Tuesday that strong U.S. demand combined with a weaker Canadian dollar should be a good sign for the sale of Canadian-made goods this year.
“Of course, the potential for protectionist measures to be implemented south of the border presents some downside risk to this outlook,” Ignjatovic wrote.
The new U.S. administration has expressed concerns about American trade deficits with its trading partners.
Hall says that even though Canada has a trade surplus with the U.S., he doesn’t expect the figure to create much concern in the White House.
“If it was a yawning gap, I would sure be a whole lot more worried about it,” Hall says. “The U.S. really seems to be looking at the deficits — the much greater deficits — with Mexico and China.”
Overall, imports to Canada decreased in January by 0.3%, the report says.
The decline was due to a drop in imports of metal and non-metallic mineral products, industrial machinery, equipment and parts, but was offset in part by an increase in imports of motor vehicles and parts.
StatsCan also released a revision Tuesday showing that December’s trade surplus was only about half as strong as a previous estimate. The figure was lowered to $447 million, down from the $923-million reading released a month ago.