MNI DATA ANALYSIS:Canada Trade Gap Widens;BOC Likely On Hold>

By Yali N'Diaye

     OTTAWA (MNI) - Canada's merchandise trade deficit widened to C$2.2 

billion in November from C$0.9 billion in October, with energy heavily 

weighing on exports, data released Tuesday by Statistics Canada showed. 

     Analysts in a MNI survey had expected a deficit of C$2.2 billion. 

     While energy explained a large part of the poor monthly 

performance, weakness was widespread, as exports contracted in 8 of 11 

sections, for an overall decline of 2.9%, the largest drop since July 

2017. On a 12-month basis, export growth slowed to 4.4% from 11.4% in 

October.

     November marked the fourth consecutive monthly decline in exports, 

which had not been seen since August-November 2015. 

     The decrease was driven by a 9.2% decline in energy exports, mostly 

due to lower prices as volumes were down 2.2%. In particular, crude oil 

exports fell 17.7% as prices were down 13.9%. Crude export volumes were 

down 4.4%. 

     Outside the energy sector, however, exports were also weak, as they 

contracted by 1.4%, including a 1.5% decrease on motor vehicles and 

sales. 

     In real terms, exports fell 1.8%, more than offsetting the 1.2% 

gain recorded in October. Excluding energy, real exports decreased 1.6%. 

     Regionally, exports to the U.S., affected by lower crude oil sales, 

fell 3.9%, the largest decline since June 2017. This was the fourth 

consecutive monthly decrease, which had not happened since October 2014 

through January 2015. 

     The trade surplus with the U.S. narrowed to C$2.2 billion, the 

smallest since September 2017. 

     Exports to non-US countries edged up just 0.1%. 

     The month of November showed that weakness in the export sector 

proves persisting, and is not only an energy story as non-energy exports 

were also down. This challenges the Bank of Canada's scenario of a 

continued strength in export growth. As a result, the latest set of data 

before Wednesday's interest rate decision seals the case for a BOC 

status quo. 

     - IMPORTS ALSO DOWN 

     The reliance of the central bank's scenario on business investment 

was also challenged by Tuesday's data. 

     Imports of industrial machinery and equipment and parts, an 

indicator of business investment activity in Canada, was down 0.6% on 

the month, with volumes down 0.4%. 

     Overall imports fell 0.5% to C$50.4 billion, including a 2.1% 

decrease in consumer goods, showing household spending momentum 

continues to ease. 

     Imports of autos and parts fell 2.8%. 

     Overall, 7 of 11 sections recorded lower imports on the month. A 

21.2% gain in aircraft and other transportation equipment and parts was 

a significant positive offset. 

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

[TOPICS: M$C$$$,MACDS$]