Canada’s trade deficit increased to $3.2 billion in December as record imports outpaced the growth in exports, Statistics Canada said Tuesday.
The result compared with a deficit of $2.7 billion in November, while economists had expected a deficit of $2.2 billion, according to Thomson Reuters.
“We’re looking for a bit more from exports in the year ahead, so hopefully December wasn’t a sign of things to come,” CIBC economist Nick Exarhos wrote in a note to clients.
The shortfall came as exports rose 0.6% to $46.5 billion driven by commodities. Energy products rose 6.2% to $8.5 billion, while metal and non-metallic mineral products climbed 7.7% to $5.6 billion.
However, excluding energy products, exports fell 0.6%.
The strength of Canadian exports has been closely watched by the Bank of Canada which expects them to start to contribute to a larger share of economic growth.
“Canada’s trade picture remains quite weak as non-commodity exports have made almost no traction for nearly a decade,” said Benjamin Reitzes, BMO Capital Markets Canadian rates and macro strategist.
“While the recent rise in energy prices might help the trade balance somewhat, the firmer loonie certainly won’t. Persistent softness in exports is one worry that doesn’t appear likely to fall off the Bank of Canada’s radar any time soon.”
Meanwhile, imports increased 1.5% to a record $49.7 billion in December, boosted by higher imports of energy products and industrial machinery, equipment and parts.
Imports of energy products increased 16.9% to $3.0 billion in December, while industrial machinery, equipment and parts climbed 6.3% to $5.0 billion.
Regionally, Canada’s trade surplus with the U.S. increased to $3.4 billion in December compared with $3.3 billion in November as imports from the U.S. fell 1.3% and exports to the U.S. slipped 0.8%.
Canada’s trade deficit with countries other than the U.S. increased to $6.6 billion in December compared with $6.0 billion in November.