Canada celebrated an unexpected trade surplus of C$638 million ($461 million) in June, driven by significant increases in crude oil shipments from the newly expanded Trans Mountain Pipeline and a surge in gold exports, according to data released on Tuesday.
This remarkable performance marked the first time in four months that exports surpassed imports, largely fueled by the robust export activity in energy and precious metals sectors, as reported by Statistics Canada. Analysts had initially projected a C$1.84 billion trade deficit, a stark contrast to the positive outcome. May's trade deficit was also revised down from C$1.93 billion to C$1.61 billion.
June saw a substantial 5.5% increase in total exports, propelled by crude oil and gold, while imports saw a more modest rise of 1.9%, primarily due to an uptick in cars and light trucks. Export volumes climbed by 3.8%, with imports increasing by 1.3%.
The completion of the Trans Mountain Pipeline expansion project (TMX) in May, which came after 12 years and C$34 billion in costs, opened new markets in the Asia-Pacific region for Canadian crude oil producers. "They are shipping more through the Trans Mountain pipeline into Asia-Pacific, which is really positive," noted Prince Owusu, senior economist with Export Development Canada.
Energy product exports, accounting for over a fifth of Canada's total exports, surged by 11.7%, with the increased volume of crude exports being a significant contributor. Similarly, metal and non-metallic product exports rose by 11.8%, largely driven by unwrought gold exports.
In a move to stimulate the economy, the Bank of Canada reduced its benchmark interest rate for the second consecutive month in July. Financial markets are anticipating a further 25-basis-point cut in September, with additional cuts expected in October and December.
Following the release of the data, the Canadian dollar experienced a slight decrease, trading marginally down by 0.04% at 1.3829 to the U.S. dollar, or 72.26 U.S. cents.
The increase in total imports was led by motor vehicles and parts, as well as consumer goods. June saw a record C$6.8 billion in imports of passenger cars and light trucks, an 8.2% rise that significantly boosted the motor vehicles and parts category.
Exports to the United States, Canada's largest trading partner, continued to rise for the third consecutive month. This growth outpaced imports, resulting in Canada's trade surplus with the U.S. reaching its highest level since November 2023.
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