Exports: a detailed analysis of what went wrong
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In April, Canadian exports of energy products dropped 18.6% to $5.4 billion, the first decline following four straight monthly increases, Statistics Canada reports.
Blame it on the end of colder-than-normal weather in eastern North America and the resolution to the war in Iraq easing upward pressure that had been on energy prices in the first quarter. The end result is a sharp drop in petroleum exports, which accounted for more than one-third of the decline in total exports.
Crude petroleum exports reached $1.6 billion, down 30.0% from record levels in March. While prices declined in April, the reduction in crude petroleum exports was mainly a result of weaker volumes.
Petroleum and coal products exports fell 11.1% to $996 million after reaching three consecutive monthly record highs. With the price of natural gas falling nearly 10% from March, exports to the United States declined 12.3% to $2.5 billion in April. Natural gas exports had risen 46.4% in the first three months of the year. Despite April’s decline, exports of natural gas remained 57.6% higher than in April 2002.
The energy sector was not the only one to suffer a setback in April, however.
Exports of automotive products fell 2.6% to $7.3 billion in April. Exports of motor vehicle parts decreased 6.2% to $2.2 billion, with most of the decline resulting from lower US assembly plant production. Passenger automobile exports decreased 2.9% to $3.6 billion. Passenger auto exports, which strengthened through the first quarter of 2003, declined in April in the face of rising unemployment in the United States, which has led to softened consumer demand.
Exports of forestry products fell 1.9% in April to $2.8 billion. Lumber and sawmill product exports fell 6.3% to $1.2 billion, the fourth monthly decline in a row. Lumber prices have fallen steadily for the last 12 months, down by nearly one-third from April 2002. New housing starts in the United States, the main consumer of Canadian softwood, dropped 6.8% to an annualized rate of 1.6 million in April.
Exports in the largest sector, machinery and equipment, declined 0.5% to $7.7 billion. Widespread declines in all machinery and equipment sub-sectors, from high-tech office equipment and telecommunications to heavy industrial and agricultural machinery, overshadowed the lone bright light in exports – aircraft and other transportation equipment. Exports of aircraft and other transportation equipment rose 8.7% to just under $2.0 billion. This was the result of a 10.8% gain in exports of aircraft, engines and parts, which reached $1.5 billion.
Exports of industrial goods and materials fell 0.6% to $5.6 billion. Declines in metals and alloys and other industrial goods more than offset increases in metal ores and chemicals, plastics and fertilizers.
There were some bright months in the otherwise bleak month.
Exports of trucks and other motor vehicles rose 4.7% to $1.4 billion. The resolution of a labour stoppage in February and part of March returned heavy truck production capacity to normal in April.
And wheat exports jumped 37.7% to $204 million despite stiff competition from non-traditional wheat exporters, Russia and Ukraine. Wheat exporters have had to battle export subsidies from EU countries and the threat of US import countervailing and anti-dumping duties. This left the level in April 29.7% lower than in April 2002.
Barley and canola exports also rebounded after bottoming-out in March. Barley exports more than doubled (+163.0%) to $8 million, still far below the pre-drought levels of around $100 million. Canola exports increased 9.9% to $113 million, about half the export level of a typical April.
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