Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Trucks move containers in the port of Vancouver in this file photo.

Chuck Stoody/The Canadian Press

Canada posted its worst monthly and quarterly trade deficit in history as the economy wore the scars of the oil price shock, but improving volumes of both imports and exports suggest that brighter days may be on the way.

Statistics Canada reported a March trade deficit of $3-billion, surpassing the previous record of $2.87-billion in July, 2012. The government statistical agency also made a major downward revision to its February number, to a deficit of $2.2-billion from an originally reported $984-million, and revised the January deficit to $1.8-billion from $1.5-billion.

The resulting $7-billion deficit in the first quarter was the biggest ever recorded, reflecting the severe damage wrought by the steep drop in prices for oil, one of Canada's biggest exports. Exports of energy products plunged by $5.8-billion, or more than 20 per cent, in the quarter.

Story continues below advertisement

Yet the Canadian dollar actually rose by one-third of a cent against its U.S. counterpart, creeping above 83 cents (U.S.), in the wake of the trade report, as economists saw silver linings in the record deficit numbers.

"The deterioration appears to have been entirely the result of lower export prices, led by weaker energy prices. The volume trade balance actually improved modestly in the first quarter," said Nathan Janzen, senior economist at Royal Bank of Canada, in a research note.

Indeed, the record March deficit showed a smart rebound in volumes for both imports and exports in the month. Import volumes were up 1.5 per cent, while prices improved by 0.5 per cent, for an overall gain of 2.2 per cent in dollar terms. Exports showed even better volume growth, up 1.9 per cent, but export prices fell 1.5 per cent, reducing the growth on a value basis to 0.4 per cent.

"The strengthening in the volume of exports in March is encouraging, and provides support to the view that the sizeable drop a month earlier was more a reflection of severe winter weather and temporary factory shutdowns in the auto sector than a slowing in underlying external demand," Mr. Janzen said.

March exports were led by an 11.7-per-cent rebound in auto-sector shipments, which had slumped in February amid plant maintenance and retooling shutdowns. However, that was largely offset by renewed weakness in the energy sector, where exports slumped 8.9 per cent, due to a drop in both prices (down 7 per cent) and volumes (down 2.1 per cent).

Excluding the energy sector, Canada's exports were up a solid 2.4 per cent in March. Many economists, including those at the Bank of Canada, have been looking for strength in non-energy exports to help lift Canada out of its first-quarter economic funk brought on by the dramatic drop in oil prices. The central bank has predicted that the economy would improve beyond the first quarter.

"A record trade deficit will make some headlines, but that'll be a rear-view look at what the fall in oil prices – which hit their lows in March – had on Canadian trade. The export volume gain, and the performance of shipments ex-energy, mean that the monthly GDP outlook for March hasn't been too severely impacted, and the flat reading on first-quarter GDP expected by the Bank of Canada still remains likely a bit too pessimistic," said Canadian Imperial Bank of Commerce economist Nick Exharos in a research report.

Story continues below advertisement

The import side, meanwhile, showed continued improvement in Canadian consumer demand. Statscan said consumer goods imports jumped 7.9 per cent in March, their fourth consecutive month-to-month increase. The March gains were widespread, as 16 of 20 segments of the consumer-goods sector showed increases. Imports of motor vehicles and parts also added to the month's gains, up 3.7 per cent.

"No signs here that Canadian consumers are taking a breather, despite the big drop in oil prices and what appears to be a soft economic backdrop," said Benjamin Reitzes, senior economist at BMO Nesbitt Burns, in a research note.

The U.S. trade numbers for March, released at the same time as the Canadian data, also showed evidence of an economy bouncing back from a harsh winter slowdown, as well as West Coast port strikes that had hampered trade in February. The deficit of $51.4-billion (U.S.) was considerably bigger than the $42-billion that economists had expected, and was up sharply from February's $35.9-billion. But it resulted from a 7.7-per-cent surge in imports, which outweighed a more modest 0.9-per-cent rise in exports.

"Following the resolution of the labour dispute in February, the West Coast ports began to work through their backlogs in March," said Paul Ashworth, chief U.S. economist at Capital Economics. "Assuming that most of the catch-up is now complete, then imports should fall back in April, bringing the trade deficit down to a more normal level, too."

"With our neighbour to the south expected to bounce back in the second quarter, the loonie staying relatively weak … and oil prices staging a modest comeback, Canada's trade profile is expected to improve in the months ahead," Mr. Reitzes concluded.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies