A shipping container is unloaded at the Port of Montreal, on May 17, 2021.CHRISTINNE MUSCHI/Reuters
Canada posted a surprise trade deficit in December, as imports hit a new record high and exports fell from November, official data showed on Tuesday, but economists expect an export rebound in January on surging energy prices.
Canada’s trade deficit was $137-million in December, well below analyst forecasts of a surplus of $2.50-billion. November’s surplus was also revised down to $2.47-billion from $3.13-billion, still good for a 13-year record.
Imports rose 3.7 per cent to hit an all-time record for the third consecutive month, driven by cellphones and other electronics, while exports fell 0.9 per cent, mostly on lower energy prices.
“It’s a pretty small deficit, I would look at it as more or less balanced. But it was a bit of a split month in December,” said Stuart Bergman, deputy chief economist at Export Development Canada.
Bergman noted strong imports of motor vehicles and parts, which bodes well for cross border trade, along with strong exports of consumer goods. Energy weighed on exports as crude prices fell sharply, but oil prices have since rebounded.
“We expect exports should probably come back in January on stronger energy prices,” said Bergman.
Still, the drop in exports in December will likely act as a drag on fourth quarter GDP, analysts said.
For full-year 2021, Canada’s annual merchandise exports rose 22 per cent, Statscan said, with the value hitting a record $637-billion. With the effect of higher prices stripped out, 2021 exports were 5.4 per cent down from 2019. “The further upswing in energy prices bodes well for the trade balance in the early part of 2022,” said Shelly Kaushik, economist at BMO Capital Markets, noting Canada’s first annual surplus since 2014.
The Canadian dollar was trading 0.3 per cent lower at 1.2710 to the U.S. dollar, or 78.68 U.S. cents.
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