Canada reported a surprise trade surplus in May, its first in almost a year, official data showed on Wednesday, in another sign the country’s economy is recovering after a recent slowdown.
Statistics Canada reported a surplus of $762-million – the first trade surplus since July, 2018, and only the second since December, 2016. The surge was fuelled by rising exports of motor vehicles, aircraft and energy products.
Analysts in a Reuters poll had forecast a trade shortfall of $1.50-billion.
Statscan revised April’s deficit to $1.08-billion from an initial $966-million.
“May’s international trade data joins a suite of other data releases confirming that the Canadian economy is recovering from the soft patch seen in late 2018 and early 2019,” said Omar Abdelrahman, economist for TD Economics.
The Canadian dollar strengthened as much as 0.3 per cent to 1.3064 to the greenback, or 76.55 US cents, approaching a near eight-month high reached last week.
“The Canadian economic data just continues to outperform despite the increasingly dour global backdrop,” BMO Nesbitt Burns Inc. strategist Benjamin Reitzes said.
The trade numbers follow stronger-than-expected employment and gross-domestic-product figures. The Bank of Canada – which has stayed on the sidelines following five interest rate hikes between July, 2017, and October, 2018 – has said it is watching economic data closely as it ponders future moves.
Total exports in May rose 4.6 per cent to a record $53.1-billion. Exports of motor vehicles were up 12.4 per cent to $8.4-billion, owing to increased shipments of passenger cars and light trucks after Canadian production increased.
“It’s an excellent sign of the recovery in Canadian trade and we think this dramatic about face is probably likely to persist given what we’ve seen in the underlying data,” Ross Prusakowski, principal economist at Export Development Canada, said in a phone interview.
Exports of boats and other transportation equipment almost quadrupled in May in part because of higher demand for light armoured vehicles from Saudi Arabia. Aircraft exports jumped 40.2 per cent because of increased shipments of business jets and commercial aircraft, particularly to the United States.
Riyadh last August had announced a ban on new trade with Canada after Ottawa urged the release of jailed Saudi rights activists. While the armoured vehicle sales contracts predated that ban, in a sign tensions might be easing, the EDC said on Tuesday it had resumed helping Canadian firms wishing to export to Saudi Arabia.
Exports of energy products rose 5 per cent in May to $10.8-billion, including a 2.8-per-cent jump in crude oil shipments, mainly on higher prices.
Canada sent nearly 74 per cent of all its goods exports to the U.S. in May. Exports to the U.S. rose by 3.7 per cent to a record $39.3-billion, while imports dropped by 0.5 per cent.
As a result, Canada’s bilateral trade surplus widened to $5.9-billion in May from $4.4-billion in April – the largest surplus since October, 2008.