MNI 5 THINGS: Oil Exprts,Lower Imprts, To Narrow Cdn Trade Gap

--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:    

- LOWER AUTO IMPORTS

     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. 

- WATCHING MACHINERY, EQUIPMENT

     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.

- HIGHER OIL EXPORTS

     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.

- NON-COMMODITY EXPORTS

     The BOC expects foreign demand to support non-commodity exports going

forward.

     In March, sales abroad excluding energy were up 3.6% after rising 1.0% in

February.

     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%.

- EXPORTS TO U.S. 

     Crude oil particularly lifted exports to the U.S. in March, which were up

1.2%.

     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: yali.ndiaye@marketnews.com

[TOPICS: M$C$$$]