Energy Export Surge Carries Canada to Repeat Trade Surplusby
December shipments of oil, gas, coal jump 16% on price gains
Cumulative 2016 trade deficit still largest on record
Canada posted a positive trade balance for the second month in December -- the first back-to-back surpluses in more than two years -- as the country benefits from rising oil prices.
The surplus of C$923 million ($700 million) in December follows the revised C$1 billion November reading, the federal statistics agency reported Tuesday from Ottawa. Energy-product exports jumped 16 percent on rising prices, the biggest monthly gain since 2010, helping offset a decline in shipments of manufactured goods.
The recovery in crude prices at the end of last year, and the fading impact of the wildfires earlier in 2016, helped produce the country’s best trade performance since the beginning of the oil shock in 2014. Canada’s trade balance swung to a C$612 million surplus in the final quarter of 2016, compared with a deficit of C$8.6 billion in the prior three months.
It was a strong end to a tough year for trade. Canada’s annual merchandise trade deficit widened to a record C$26.1 billion in 2016, from C$23 billion a year earlier.
One area of concern remains non-energy exports, which were down 2.1 percent in December. That was driven by a 5.2 percent drop in shipments from the motor vehicle industry, whose exports fell to the lowest since June 2015. Energy exports exceeded motor vehicle-related shipments in December for the first time in more than a year.
As a result, Canada’s trade surplus with the U.S. actually narrowed to C$4.42 billion in December from C$4.74 billion a month earlier.
Even with the drop in export volumes in December, “net trade will nonetheless contribute to economic growth during the fourth quarter,” Dina Ignjatovic, economist in Toronto at TD Economics, wrote in a note, adding the growth rate in the three months will probably be slightly higher than 2 percent.