Transborder trade, the engine of growth for the Canadian economy, took a tumble in May, the latest Statistics Canada numbers indicate.
Merchandise exports and imports both dipped during the month with most major sectors, particularly machinery and equipment, turning in weaker performances.
Canadian companies exported just under $37.1 billion worth of merchandise in May, down 0.9% from April, as global demand for high-tech equipment continued its decline, Statistics Canada reports.
At the same time, imports fell 1.4% to $30.1 billion. Slumping automotive and machinery and equipment imports more than offset sharp increases in incoming energy products and industrial goods and materials.
With imports declining at a faster pace than exports, Canada’s merchandise trade balance grew to almost $7.0 billion in May.
Merchandise exports to the United States, Canada’s largest trading partner, declined 1.1% in May to $31.6 billion; imports from south of the border fell 1.1% to $22.1 billion. As a result, the trade surplus with the United States dropped slightly, from $9.6 billion in April to almost $9.5 billion in May.
On an industry-by-industry view, exports declined in May in all major categories except agricultural and fishing products. Hardest hit was high-tech equipment, such as computers and optical network equipment, as global demand continued its decline.
Exports in the machinery and equipment sector, which accounted for 22.4% of total exports, declined 2.0% to $8.3 billion in May. Within this sector, exports of telecommunications and related equipment fell 11.7% to $1.2 billion, while office machines and equipment exports, mainly office computers, dropped 7.6% to $823.6 million. Compared with May 2000, machinery and equipment exports were 10.2% lower in May. Since attaining a record high of $9.7 billion in December 2000, these exports have declined 16.7%.
Exports of energy products fell 1.3% to $6.5 billion, which was still 62.4% higher than in May 2000, the result of consistently higher energy prices in 2001. May’s decline mainly resulted from natural gas exports falling 5.6% to $3.4 billion as prices slid in tune with reduced demand for home heating fuel and stable inventory levels. With air-conditioning season approaching, however, demand for other energy products, including electricity and coal for electricity generation, grew 6.1% to $1.8 billion dollars in May.
Exports of automotive products dropped a slight 0.4% to $7.9 billion in May, largely owing to a 2.8% decline in exports of passenger autos to $4.2 billion. Exports of motor vehicle parts rose a marginal 0.1%. These declines were tempered by a 6.2% increase in the export of trucks and other motor vehicles, such as school buses.
Producers exported $3.4 billion worth of forestry products, down 1.2% from April in the wake of the Canada-U.S. softwood lumber dispute and softening demand for newsprint. Lumber exports fell 2.1% to just over $1.0 billion; newsprint and other paper exports declined 1.5% to $1.2 billion.
The one bright spot was exports of agricultural and fishing products, which hit a record $2.7 billion, up 2.5% from April. Since March, exports of these products have grown 10.5%, driven largely by strong exports of Canadian canola in Asia. However, in May, canola exports fell 26.1% as Chinese crops started to come onstream and domestic stocks shrank. Canola exports totalled $171.5 million in May, still 54.4% higher than May 2000.
On the import side, strong increases in imports of energy products and industrial goods and materials weren’t enough to offset declines in imports in other major sectors in May.
Imports of machinery and equipment, the largest import sector, fell 3.6% to $9.6 billion. Much of this deterioration resulted from a 12.2% drop in communications and related equipment to $1.7 billion. Imports in this sector have fallen 34.6% over five consecutive months from the record high levels reported in December 2000.
Imports of automotive products slipped 2.5% to $6.1 billion following two months of solid growth. The main factor was motor vehicle parts, which slumped 3.7% to $3.6 billion.
Energy product imports rose 7.0% to $1.8 billion. Crude petroleum imports climbed 8.4% to $1.3 billion in May, partly because of higher prices.
Industrial goods and materials imports increased 2.3% to $6.1 billion, almost entirely on the strength of precious metals and alloys imports, which more than doubled (137.0%) to $405.9 million. Nearly all other industrial goods and material import sectors saw declines in May.
For more information, contact Jocelyne Elibani, (1-800-294-5583; 613-951-9647), International Trade Division, Statistics Canada.
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