Monthly trade report - October 2024

Highlights

• Canada’s exports and imports of goods and services demonstrated growth in October for the first time since June, with an increase of 1.0% for exports and 0.8% for imports.
• Goods exports were up 1.1% driven by metal and non-metallic mineral products. Services exports were up 0.7%.
• Meanwhile, services imports expanded 2.0% thanks to increased spending by Canadian travelers abroad. Additionally, imports of goods grew 0.5%, largely driven by metal ores and non-metallic minerals.
• The volume of goods exports rose 0.4%. Similarly, goods import volumes increased 0.3%. Prices for exports and imports also rose - this is the first month since June that all 4 volume and price components of goods trade rose in the same month.

Table 1: Canada’s trade performance

Figure 1: Canada’s monthly trade performance

Industry view - Exports

Export decreases were observed in 8 of the 11 product categories, as the drivers behind the overall increase were very concentrated. The increase in exports was driven mainly by metal and non-metallic mineral products which rose by 10.6%. This is explained by a large rise in the exports of unwrought gold, silver, and platinum metals (20.9%), following a notable decrease in September (-9.7%). Consumer goods also rose by 4.7% driven by an increase in pharmaceutical product exports to the United States.

A decline in exports of industrial machinery, equipment and parts (-3.7%) partially offset the overall increase observed in October, due to a fall in exports of flight simulators to the United States.

Export increases were seen in 3 of the 4 service sectors in October. The largest gains were in transportation services (6.4%), due to higher revenues from passenger fares, followed by government services (1.4%) and travel services (0.3%).

Figure 2: Exports by industry and sector

Industry view - Imports

Imports fell in 6 out of 11 product categories, with growth highly concentrated.

Metal ores and non-metallic minerals increased by a substantial 46.1% in October, driven by a 70% increase in volumes (prices actually decreased). Energy products (6.2%) also contributed to this month’s increase. However, this was partly offset by a decline in imports of consumer goods (-1.6%) and chemical, plastic and rubber products (-2.3%).

Import increases were observed in all 4 service sectors. Travel services were the main contributor to this growth (5.1%) due to an increase in spending by Canadian travelers abroad. Transportation services (2.7%) and government services (1.9%) also contributed to the overall growth.

Due to changes in import data collection methods and systems, a greater share of data for the month is estimated, which may result in larger than normal revisions in future releases.

Figure 3: Imports by industry and sector

Global markets

Goods exports to the United States decreased 2.8% in October, due in part to lower exports of flight simulators, while imports rose by 1.1%. This resulted in a narrowing of Canada’s trade surplus with the United States from $7.9 billion in September to $6.2 billion in October.

In October, exports to countries other than the United States increased by 13.1%. This was largely driven by higher exports of unwrought gold to the United Kingdom, following a decrease in September, and to Hong Kong.

Imports from countries other than the United States in October declined by 0.5%, a smaller decrease than the 2.4% reduction observed in September.

Consequently, Canada’s trade deficit with countries other than the United States saw a reduction from $9.2 billion in September to $7.1 billion in October.

Figure 4: Goods trade by main markets

Prices and volumes

The growth in the value of goods exports was driven by both prices and volumes, increasing 0.7% and 0.4%, respectively. Export prices grew for the first time after 2 months of declines, supported by broad-based growth across many sectors. The growth in export prices were also supported by the price of Western Canada Select (WCS), Canada’s benchmark for crude oil price, which increased 3.5% in October after 2 months of declines.

The growth in the value of goods imports was driven by both prices and volumes, increasing 0.2% and 0.3%, respectively. Similar to exports, this is the first increase in import prices after 2 months of declines.

The Canadian dollar depreciated 1.5% to reach 72.7 US cents in October, reflecting the faster pace of rate cuts from the Bank of Canada when compared to the Federal Reserve.

Figure 5: Goods trade

Figure 6: Exchange rate & oil prices

What to watch

• U.S. president-elect Donald Trump suggested imposing a 25% tariff on imports from Canada and Mexico (and additional 10% on imports from China) in a late-November social media post. Such a policy would have severe impacts on Canada’s international trade and investment attraction.
• Following labour actions and lockouts, the ports of Vancouver and Montreal have reopened, but impacts could be felt through delays in the shipment of some products.
• The Canadian dollar has depreciated significantly against the U.S. dollar in recent months, partially reflecting the widening interest rate differential.
• China has announced a series of policy measures designed to stimulate growth in international trade. The measures include commitments to provide enhanced financing support to firms, expand exports of agricultural products and facilitate imports of core equipment and energy products.

Table 2: Trade by industry sector

Table 3: Goods trade by main markets