Statistics Canada revealed that higher crude prices and gold transfers to the United States contributed to exports outpacing the increase in imports. This outcome surprised analysts, who had anticipated a deficit of C$1.5 billion, while July’s shortfall was revised to C$437 million from C$987 million.
The data showed that total exports grew by 5.7%, while imports saw a 3.8% increase. Both sides of the trade equation benefited from higher prices in August. In terms of volume, exports rose by 3%, while imports increased by 1.2%.
The notable surge in exports, the most substantial since October 2021, was primarily driven by precious metals and energy products. Prince Owusu, a senior economist at Export Development Canada, described the trade balance’s recovery as a positive development, especially after three consecutive months of decline, adding that it could contribute to growth in the third quarter.
It’s worth noting that Canada experienced a contraction in growth during the second quarter, with gross domestic product registering minimal gains in both July and August.
The export of metal and non-metallic mineral products reached a record high of C$8.5 billion in August, partially due to increased gold exports to the United States. Gold asset transfers in the banking sector played a significant role in this monthly increase.
Furthermore, the value of energy product exports surged by 14.6% in August, with crude oil exports serving as the primary driver.
Shelly Kaushik, an economist at BMO Capital Markets, highlighted the stronger-than-expected volumes in merchandise trade, suggesting a potential contribution to third-quarter growth. However, she noted that the economy is expected to slow significantly in the second half of the year.
Total imports saw growth, driven by industrial machinery, equipment, and parts, active pharmaceutical ingredients from Switzerland, as well as fertilizers, pesticides, and other chemical products.