Canada's trade gap narrows in October on petroleum, canola exports

TD economist Dina Ignjatovic said the Bank of Canada is likely to look on the growth of exports as a positive sign for Canada's fourth quarter growth.

Statistics Canada said Tuesday that exports increased 2.7 per cent as imports fell 1.6 per cent for the month, shrinking the country's trade deficit compared with the $3.4-billion shortfall in September.

United States imports of goods and services rose to the highest on record in October, widening the trade gap to its highest level in nine months, according to government data released on Tuesday (Dec 5).

Canada's hard-hit export sector showed unexpected signs of strength in October, posting the first increase since May on higher shipments to the United States while imports continued to disappoint.

Exports were unchanged at US$195.9 billion, but services exports were also the highest on record at US$65.6 billion. A rising trade gap reduces US economic growth.

Trade experts have warned that President Trump's protectionist policies will reduce the amount the USA exports and will widen its trade deficit.

It was the second straight month in which the USA trade gap widened, driven in part by goods imported from China of US$48.2 billion, an all-time high, bringing the United States trade deficit with that country to US$31.9 billion.

"I give China great credit, but in actuality I do blame past administrations for allowing this out-of-control trade deficit to take place", Trump said. Shipments from Mexico were also the highest ever, causing the USA gap with that country to expand in October.

During his five-nation tour across Asia, the president promoted business deals in Japan, South Korea and China as ways to help lower trade deficits with major trading partners across the Pacific Rim.

Especially strong was the rise in energy exports, primarily to the U.S. Exports of gasoline blending stock were up 44.5 per cent and diesel and fuel oils exports rose 18.4 per cent after a recent drawdown in U.S. inventories of refined petroleum products. Imports of drilling and oilfield equipment climbed by $304 million, and imports of cellphones rose by $303 million.

Vanessa Coleman