Skip to main content

Stacks of lumber at Teal-Jones Group sawmill in Surrey, B.C., on May 30, 2021.DARRYL DYCK/The Canadian Press

Canada posted its first quarterly current account surplus in 13 years thanks to surging exports, particularly of lumber and energy products.

Statistics Canada reported a $1.2-billion surplus for the first three months of 2021, up from a revised deficit of $5.3-billion in the fourth quarter of 2020. The current account measures Canada’s balance of trade with the rest of the world.

This swing into positive territory, the first since 2008, was supported by strengthening commodity prices. Energy exports were up $6.8-billion in the quarter, as the price of oil climbed to prepandemic levels and the price of natural gas surged after the winter storms and power outages across the southern United States in February.

The export of forestry products rose by $1.4-billion on ballooning lumber prices. Canada also saw an unusually strong quarter for aircraft exports, after an airline retired a number of planes from its fleet and sold them to buyers in the U.S. in January.

“The goods trade balance returned to a modest deficit in March, but we expect another (smaller) surplus for Q2 as global economies reopened and commodity prices continued to move higher,” wrote Bank of Montreal economist Shelly Kaushik in a note.

Forest products stocks are well off their highs as lumber prices remain sky high. Time to buy the dip?

As for trade in services, Canada has maintained a slight surplus for the past four quarters, even as the overall level of trade has been depressed during the pandemic. Travel restrictions have hurt Canadian tourism businesses, but they have also limited Canadian spending abroad.

“Look for modest surpluses to continue in the coming quarters, until borders reopen and Canadians resume spending their dollars abroad,” Ms. Kaushik wrote.

As for the financial account, which measures international investments, foreign direct investment into Canada hit $19.6-billion in the quarter, the highest level since the second quarter of 2019, with most of the money flowing to the energy, mining and manufacturing sectors. By contrast, outbound direct investment by Canadian companies into other countries was $10.5-billion in the quarter.

Canadians continued to acquire a large number of foreign securities, buying $37.4-billion worth of foreign stocks and bonds in the quarter. These investments were “largely shares of large-capitalization technology firms and investment fund shares tracking broad market indices,” Statscan said.

On the flipside, foreign investment in Canadian securities slowed to $12.7-billion in quarter, compared with $21.9-billion in the preceding quarter.

“Non-residents significantly invested in Canadian shares, but reduced their holdings of debt securities. This was the first divestment in Canadian debt securities since the fourth quarter of 2018,” Statscan said.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.