There are now clear signs the global slowdown is weighing on trade flows as half the Group of Eight, including Canada, released their September trade figures Thursday.
Two of the world's trade juggernauts – Germany and Japan – are stumbling badly. German exports fell 2.5 per cent from a month earlier as the euro crisis starts to take a heavy toll on the region's largest and strongest economy. Exports to its European Union brethren were off 3.4 per cent.
European Central Bank chief Mario Draghi said bluntly Thursday that Germany is no longer "insulated" from the turmoil in the euro zone.
Exports also tumbled 3.3 per cent in Japan, continuing a decade-long trend there. The country continues to run a current account surplus – a measure of trade, tourism and investment flows – but it's falling fast (nearly 70 per cent from year ago).
That raises the ominous possibility that Japan may some day run a deficit, challenging its ability to finance its massive government debt from domestic savings alone.
In Canada, the trade deficit narrowed in September (to $830-million from a revised $1.52-billion in August). But it was the sixth consecutive monthly deficit.
The third quarter as a whole is probably more telling of what's really been happening in Canada as exporters face the double hit from the high loonie and the stalling global economy.
Export volumes contracted 8.3 per cent in the quarter, and that could drag economic growth well below 1 per cent per year in the July to September period.
"This is not surprising given the economic woes experienced in the U.S., Europe and China," Toronto-Dominion Bank economist Diana Petramala said in a research note.
One slightly better month doesn't "compensate for a poor start to the quarter," National Bank economist Krishen Rangasamy added. "The slow global economy is certainly to blame, although the negative impact of the strong Canadian dollar cannot be ignored," he said in a research note.
The outlier in September was the United States, which surprised economists by reporting a smaller trade deficit ($41.5-billion U.S., compared with $43.8-billion in August), paced by a bump up in overall exports.
The smaller gap "opens the door" to the possibility that U.S. gross domestic product may grow faster than expected in the third quarter, economist Paul Dales of Capital Economics said in a research note.
Most economists expect U.S. GDP to grow at an annual rate of 1.5 to 2 per cent in the third quarter. The International Monetary Fund forecasts that the economy will grow 2.2 per cent this year.
The gain in exports was due mainly to a 35-per-cent jump in petroleum product exports, which economists attributed to a rebound from the effects of Hurricane Isaac in August. But several other export categories were also up sharply, including food.
CIBC economist Andrew Grantham said Hurricane Isaac was a "major factor" in the smaller U.S. trade deficit.
And if there is a green shoot anywhere in the U.S. numbers, it's the consumer. Consumer goods imports jumped 3.3 per cent from August, suggesting that Americans may be poised to start spending again at a healthy clip.