MNI Analysis:Cdn Oct Goods Trade Gap Narrows;US Dmd Strngthens>

By Yali N'Diaye

     OTTAWA (MNI) - Canada's merchandise trade deficit narrowed to C$1.5  

billion in October, benefitting from stronger sales to the U.S. against 

the backdrop of a weaker loonie, data from Statistics Canada showed 

Tuesday. 

     Analysts in a MNI survey had expected the deficit to narrow to 

C$2.7 billion. 

     Despite the revision to September's deficit estimate, now at C$3.4 

billion, larger than the C$3.2 billion gap initially reported, October's 

reading was still a positive surprise. 

     The main reason was that exports finally posted their first gain 

since May this year, as they increased 2.7% to C$44.5 billion, after 

remaining flat in September and dropping in June through August. 

     Imports, on the other hand, contracted 1.6% on the month to C$45.9 

billion. 

     On a real term basis, the picture was similar, with exports up 1.2% 

and imports down 3.9%, the largest drop since October 2016. As a result, 

the trade balance went to a C$0.1 billion surplus in October from a 

C$2.0 billion deficit in September. 

     Details on the export front were overall strong and should be a 

relief for the Bank of Canada still counting on U.S. demand to lift 

Canadian exports. 

     Export gains were widespread, as 9 of 11 major sectors recorded 

higher exports on the month, led by basic and industrial chemical, 

plastic and rubber products (+12.4%). 

     Energy exports rose 2.7% due to higher prices, as volumes edged 

down -0.3%. Real exports excluding energy were up 1.7%. 

     Regionally, exports were led by higher demand from the U.S.: sales 

to the U.S. rose 4.1% after falling 1.9% in September. 

     The report came after the agency reported Friday that exports fell 

2.7% in the third quarter - a 10.2% fall on an annualized basis - the 

first decline since the second quarter of 2016, led by a 3.4% drop in 

goods exports. 

     On the other hand, exports to non-US countries were down 1.4% in 

October. 

     On the import front, the picture was weak, with declines led by 

autos and parts (-8.1%), due to planned shutdowns in the industry. 

     Industrial machinery and equipment imports fell 1.9%, with volumes 

down 3.5%, a negative sign for business investment activity in Canada. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

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