Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.
Canadian companies exported a record high $40.8 billion worth of merchandise goods in January while imports slowed, pushing our trade surplus with the world to its highest level in more than a year. Exports rose for the third consecutive month, up 0.9%. Imports declined 2.8% to $34.4 billion in January, down from the previous month's record high of $35.4 billion.
As a result, Canada's trade surplus with the world widened considerably from $5.0 billion to $6.3 billion, the largest surplus since December 2005. Constant dollar exports, which refer to exports for which the change in prices has been removed in order to isolate the change in volumes, were slightly stronger, up 1.1%, while constant dollar imports were down a slightly more moderate 2.4%.
Exports to the United States were up 0.4% despite drops in automotive and energy products, while imports dropped 2.9% as a result of widespread declines. This yielded a trade surplus with the United States of $8.7 billion, the highest since January 2006.
Exports to countries other than the United States increased 2.6% to $9.6 billion as metals, drilling equipment and fishing vessels all headed overseas. Imports from these countries were down 2.6%, which resulted in a trade deficit of $2.4 billion. This was the lowest level since April 2004.
The trade deficit with countries other than the United States had been widening for several years until early 2006. It has since reversed as the steep increase in metal export values has outpaced Canada's growing demand for consumer goods.
Also, for the first time since December 1995, Canada posted a merchandise trade surplus with the European Union.
Machinery and equipment exports lead January's gain
A large increase in machinery and equipment secured the gain in exports, but was aided by increases in industrial goods, agricultural products as well as forestry. Declines were recorded for both energy products and automotive products.
Machinery and equipment exports increased 5.4% to $8.7 billion, on the strength of transportation equipment, such as drilling equipment and fishing vessels. Information technology equipment and industrial machinery also contributed to the jump.
Industrial goods and materials increased 1.7% to a record $8.9 billion in January, the sector's ninth consecutive rise. Record-high exports of metal ores pushed up the sector, as prices continued to climb and shipments of fertilizers increased.
Exports of agricultural products rose 3.3% to a record high $2.9 billion, surpassing the old record of June 2004. Increased exports of soybeans, canola and corn accounted for the gain.
Woodpulp and lumber were both up in January, contributing to a 1.9% increase for the forestry sector. Newsprint exports were stable while sawmill products registered a decline.
Exports of energy products fell 2.0% to $7.1 billion for the month, dragged down by lower crude, coal and refined petroleum export values. While both crude petroleum and refined petroleum exports saw values fall, as a drop in prices offset a volume increase, a large drop in export volumes explained the decline for coal.
The recent export growth for automotive products came to an end in January, declining 2.5% to $7.3 billion. Lower auto shipments accounted for the decline, falling 8.1% to $3.7 billion. This followed a strong fourth quarter in 2006, during which new models were distributed across North America, and coincided with reports of weakening auto sales in the United States. This drop offset strong truck exports for the month, which were up 8.6% to $1.5 billion, and a 1.0% increase in motor vehicle parts to $2.2 billion.
Imports decline in all sectors but agriculture
Imports fell in all sectors save agricultural and fishing products, which increased for third consecutive month in January to a record high.
Imports of automotive products fell 6.5% in January to $6.7 billion, following strong imports at the end of 2006, due to robust sales in the West and Newfoundland and Labrador. The decline was felt by a wide variety of car-makers, as sales slowed in the new year.
Machinery and equipment imports were down 3.2% to $9.8 billion. Lower imports of aircraft as well as scientific equipment accounted for the majority of the decline. Imports of drilling and mining machinery, which had been growing throughout the latter half of 2006, also contributed to the decline in January. Industrial goods and materials dropped 1.7% from the previous month to $7.0 billion, as companies posted reduced orders for metals and metal ores. In contrast, imports of chemicals and plastics were up 6.3% to $2.5 billion, primarily as a result of higher demand for chemicals required for the production of pharmaceutical products.
Imports of consumer goods also edged down in January. Imports of televisions, radios and similar goods sustained the losses, as did clothing and footwear, after rallying towards the end of 2006. Moderating these declines were increased imports of pharmaceutical products.
Agricultural and fishing imports surged 4.0% to a record high of $2.1 billion in January. Imports of fruit and vegetables hit a record level of $622 million, pushing up the sector as a whole. Fruit and vegetable imports have shown a steady growth trend over the past three years.