- Marc-Antoine Dumont
Senior Economist
Canada: Gold Exports Saw the Trade Balance Shining in February
Highlights
- Canada’s international merchandise trade surplus increased from $0.6 billion in January to $1.4 billion in February.
- Exports rose 5.8%, the largest gain since August 2023. Imports were also up 3.1%. In real terms, both exports and imports increased in January, with a 6.2% and 4.1% m/m gain, respectively.
- Canada’s trade deficit with countries other than the United States narrowed from $8.2B to $7.7B. Meanwhile, the trade surplus with the US edged up to $9.1B from $8.8B.
Comments
Today’s data is a gold story as exports of precious metals increased 68.8% in February. The rise in gold export volumes coincided with the steep rise in gold prices and, therefore, explains more than half of the total increase in exports. With gold prices reaching records, gold could continue to support exports in March and April, although the volume of gold shipments can be lumpy at times. Excluding the increase in this category, things didn’t look as shiny. The trade balance would have slipped into negative territory at $-0.6 billion were it not for a $2.0B increase in precious metals exports. While most of the other product categories also posted a gain in February, such as farm, fishing and intermediate food products (9.7%) and motor vehicles and parts (3.8%), imports also posted broad-based gains.
After sliding in January, imports of consumer goods rose 3.3% in February, which could be reflected in retail sales. Some volatility was, however, observed in energy imports (10.2%) as the timing of sea deliveries can cause strong increases.
Implications
While today’s trade data came in a little stronger than expected, it didn’t nudge our GDP tracking much higher. We still expect a real GDP growth (annualized) of around 2.5% to 3.0% in Q1 2024.