OTTAWA - A sharp decrease in imports, coupled with a smaller drop in exports, raised Canada's merchandise trade surplus to $4.1 billion in August, compared with $3.4 billion in July and $4.2 billion in August of last year.
Statistics Canada said imports fell 3.9 per cent from July's record high to $34.4 billion in August. This came despite the rising value of the Canadian dollar, although the August numbers precede the loonie's big September surge. Imports declined broadly, except energy, farm and fish products.
Exports were down 1.8 per cent to $38.5 billion as only two sectors _ machinery and equipment, and agricultural and fishing products _ recorded gains.
While the trade surplus with the world as a whole was $4.1 billion _ exceeding analyst expectations of $3.8 billion _ the surplus with the United States widened to $6.7 billion.
"Prior to the loonie's run to parity, Canadian trade trends were quietly eroding but still quite healthy, as shown by the decent August reading,'' commented BMO Nesbitt Burns economist Douglas Porter.
"Trade is likely to weaken anew in the months ahead as exports face the full force of the loonie's latest jump and slow U.S. growth.''
After a record high in July, exports of industrial goods and materials dropped 9.0 per cent to $8.8 billion, with metal ores showing the largest decrease.
Exports of cars, trucks and automotive parts declined 6.0 per cent to $6.2 billion.
Shipments of forestry products fell 1.0 per cent to $2.4 billion, the fifth decrease in as many months. Exports of wood pulp and other wood products used in the manufacture of paper rose 6.6 per cent, with China an especially strong market.
Energy products slipped 0.3 per cent to $7.2 billion, the third monthly decline.
Exports of aircraft, engines and parts climbed 37.1 per cent to $2.1 billion, pushing total exports of the machinery and equipment sector up 6.6 per cent to $8.4 billion. Industrial machinery exports rose for the second consecutive month, increasing 5.1 per cent to a record $1.8 billion.
Agricultural and fishing products exports rose 5.4 per cent to $2.9 billion, as canola shipments soared by more than a third.
Imports fell for the first time since May, with automotive products and industrial goods and materials leading the decrease.
Imports of cars, trucks and parts fell 8.1 per cent to $6.6 billion, while imports of industrial goods and materials fell 6.2 per cent to $6.9 billion and purchases of machinery and equipment from abroad fell 2.8 per cent to $9.7 billion.
Imports of other consumer goods were down 2.7 per cent to $4.4 billion.
Energy imports were virtually unchanged at $3.2 billion.
Imports of agricultural and fishing products hit a record in August, rising 2.1 per cent to $2.1 billion.
"Given the sharp gain in the Canadian dollar in September, one would expect imports in the month to rebound, and they might, but we also need to be alert to increased leakage from Canadian consumption and imports as cross-border shopping increases,'' wrote Andrew Pyle, vice-president of Scotia Capital.
"We'll need to see how the fourth quarter begins to shape up in terms of both net export performance and domestic demand (for domestically-sold goods) shapes up but it looks as though Canadian dollar support is going to start to fade.''
