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What to watch out for


Tests The August Low

--5 Things To Look For In Canada March Labor Force Survey 
By Yali N'Diaye
     OTTAWA (MNI) - Statistics Canada will release the April merchandise trade
data Wednesday morning. Ahead of the release, we highlight five themes:    
     Analysts in a MNI survey expect the merchandise trade deficit to narrow to
C$3.0 billion from the record C$4.1 billion reached in March. 
     A 6.0% surge in imports to a record high C$51.7 billion in March, supported
by a solid 5.3% gain in volumes, is expected to be partially corrected in April.
     Autos and consumer goods mostly explained the March import increase, and
analysts especially expect the auto sector to retrace in April. 
     On the import front, machinery and equipment is also an item to keep an eye
on given that it provides a gauge of business investment activity in Canada, a
key pillar of the Bank of Canada's growth scenario.
     "Data on imports of machinery and equipment suggest continued recovery in
investment," the BOC said in its May 30 policy statement, although the central
bank still stressed that uncertainty related to trade policy continues to
restrain business investment.
     At the same time, Canadian exporters, said BOC Deputy Governor Sylvain
Leduc in a May 31 speech, are operating at full capacity, while foreign demand
is rising. So such uncertainty could limit exporters' ability to expand as they
hesitate to invest or invest outside of Canada.
     In that context, machinery and equipment imports remain on the BOC's radar.
Industrial machinery, equipment and parts imports rose 3.2% in March, on the
back of a 2.1% gain in February, and an 11.3% plunge in January.
     On the export front, Canada could benefit from a further increase in energy
exports in April.
     Total exports rose 3.7% in March, owing to a 3.0% gain in volumes. Energy
exports rose 4.2%, although gains were widespread across sectors.
     The BOC expects foreign demand to support non-commodity exports going
     In March, sales abroad excluding energy were up 3.6% after rising 1.0% in
     Over the first quarter, services (+1.7%) led the 0.4% export growth,
according to GDP data released May 31. Exports of goods were up 0.2%.
     Crude oil particularly lifted exports to the U.S. in March, which were up
     Given the ongoing uncertainty about trade policy and the heightened
tensions related to steel and aluminum tariffs imposed by the U.S., exports to
the U.S. will remain important to follow.
     Even if Canada accelerates its efforts to diversify, the U.S. will likely
remain the most important trading partner. For now, it is too early for data to
reflect any impact related to the metal tariffs in place since June 1.
--MNI Ottawa Bureau; +1 613 869-0916; email:
[TOPICS: M$C$$$]