Merchandise exports grew rapidly in March, almost doubling the growth of imports, Statistics Canada reported this morning.
Canadian companies exported nearly $34.9 billion worth of merchandise outside the country, up 1.7%. On the other hand, imports rose only 0.9% to nearly $28.7 billion, the highest level in a year.
As a result, the surplus surpassed $6.2 billion, its highest level since May 2001.
March’s gain in exports followed a 7.5% rebound in February, marking the first back-to-back monthly increases since January 2003. This rise was led by automotive trade, which showed some consistency in March, dampening some recent trade volatility.
Exports to the United States rose 0.9% to $28.1 billion, their highest level since March last year, while imports from south of the border were up 1.2%. Canada’s trade surplus with the United States remained unchanged at just over $8.1 billion.
Canadian companies sent more goods to most non-US destinations, except for a 2.7% decline to the European Union. Higher exports of automotive and agricultural products to Mexico, combined with energy product shipments to South Korea, contributed to export gains to other Organisation for Economic Co-operation and Development (OECD) countries. This allowed Canada’s non-US trade deficit to shrink to less than $1.9 billion.
Small price increases on both the import and export side indicated that most of March’s trade movements were volume-induced.
Canadian exports increased for all major sectors in March, with the exception of a slight dip in energy products.
An increase of $200 million in passenger car exports helped automotive products achieve consecutive monthly gains for the first time since February 2003. Most manufacturers reported export growth during the month, driven by strong sales in the United States, where the majority of Canadian car exports are destined.
Exports of motor vehicle parts increased to a lesser extent, while trucks and other motor vehicles declined only slightly.
Private housing starts in the United States grew again in March, contributing significantly to growth in both lumber and other wood fabricated material exports. The latter includes products such as plywood and oriented strand board, whose strong export prices have helped set record levels for the past two months.
Exports of industrial goods and materials also set a monthly record in March as a result of higher precious metal and alloy exports, mainly to non-US destinations. Despite a setback in metal ore exports in March, international demand and prices have been strong for most products in this sector since last year.
Machinery and equipment exports rose 1.3% as a strong month for aircraft, including engines and parts, was almost offset by lower exports of some finished products.
Merchandise imports increased in most major sectors in March, though Canada’s largest, machinery and equipment, cooled off 1.6% from its best month in a decade.
Automotive product purchases, mainly from the United States, led the import rise. Passenger car imports rose by almost $100 million, followed closely by both trucks and motor vehicle parts.
Higher imports of petroleum and coal products, partly price-induced, lifted the energy product sector, while crude petroleum imports rose only a slight 0.6% to $1.1 billion. This was the net result of higher prices and lower volumes.
Imports of consumer goods hit $3.8 billion on the strength of gains in apparel and apparel accessories (+3.1%), as retailers and merchants began accumulating seasonal inventory.
The biggest declines in imports occurred in machinery and equipment, where imports fell 1.6%. This was the result of fewer aircraft and transportation equipment imports, along with office machines and some other industrial machinery.
Within the industrial goods and materials component, higher metal and metal ore imports were offset by lower purchases of chemicals and plastics and a variety of other fabricated materials. This kept the sector unchanged at $5.6 billion.
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