Trade slows, stays positive, StatsCan reports

After a surge in trade in January, both export and import activity pulled back a bit in February, Statistics Canada reports.

The merchandise trade surplus declined from $1.2 billion in January to $422 million, as exports contracted by 2.4% and imports decreased 1.3%, the national statistical agency said.

“Export volumes are now narrowly outpacing imports over the first two months of the year, meaning net trade should have a positive contribution to [first quarter] growth,” TD Economics said in a research note.

“This continues to bolster the narrative that growth this quarter will rebound strongly after flatlining in the final quarter of [2022],” it added.

At the same time, StatsCan reported that services exports declined by 1.3% in February, and services imports increased 0.4%, boosting the trade deficit in services to $2.2 billion from $2.0 billion in January.

Overall, the trade deficit widened from $766 million in January to $1.8 billion in February, StatsCan said.

“Following a surge in trade volumes during January, February was about trying to hold onto those prior gains. While both import and export volumes dropped in the latest month, the declines were much more modest than the increases seen in January, suggesting that the Canadian economy is continuing to benefit from an improvement in supply chains for some items as well as global demand for natural resources,” CIBC World Markets said in a research note.

The combination of supply chain improvements and strong demand for resources suggests that “exports probably won’t be impacted as much or as quickly by a slowing U.S. and global economy later this year,” CIBC said, “although Canadian exports certainly won’t be immune to those forces either.”

Indeed, TD noted that the trade data supports “the idea that the Canadian economy, while continuing to chug along, is showing signs of moderating.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.