Merchandise Trade October 2024: Merchandise exports post golden month, growing for the first time since June.

Canada’s merchandise exports rose for the first time since June, boosted by prices and a depreciating dollar. This wasn’t a broad-based increase, but we expect a pickup in trade over the next few months as companies stockpile inventories to prepare for President Trump’s 25% tariff on Canadian exports to the United States. Export volumes remain positive in the third quarter, but there’s much uncertainty about trade prospects.

Headline

Canadian nominal merchandise exports grew 1.1% in October, with volumes rising only 0.4% on the month. Imports grew 0.5% narrowing the trade deficit from $1.3 billion to $924 million. This was the first month since June where merchandise exports posted growth, mainly due to higher prices.

Key Takeaways

• Metal and non-metallic minerals led exports in October, growing 11% in October. The category was lifted from higher exports of unwrought gold, silver, and platinum, which rose 21% in October. Exports of these metals are up year-to-date compared to the same period last year as demand for precious metals has increased.
• Consumer goods also supported export growth in October, increasing 5% on the month. Pharmaceutical product exports were up 37% in October, which helped reverse the two-month decline in the broader consumer goods category.
• Industrial machinery and equipment were the largest detractor in October, declining 4%. Exports of flight simulators within the service industry machinery and equipment were down significantly.
• Merchandise imports reversed course in October, rising 0.5% in October due to a spike in imports of metal ores and non-metallic minerals (+46%). Imports of energy products grew 6% in October, partially offsetting declines in consumer goods and chemicals.
• Exports to the United States fell 3%, while exports to other countries increased significantly (+13%) due to shipments of gold to Hong Kong and the United Kingdom. Canada’s trade surplus with the U.S. narrowed from $7.9 billion to $6.2 billion in October.
• Services exports grew 0.7% in October, but imports grew much faster, increasing 2%.
• Overall monthly exports of goods and services rose 1%, while imports increased 0.8%.

Implications

• Merchandise exports returning to growth in October signals some hope that the fourth quarter could continue some progress. This wasn’t as broad-based as we’d like to see, but we continue to believe that companies will advance orders in hopes to avoid the planned 25% tariff on Canadian exports to the U.S.
• Revisions to September data were minor, but weakened the net trade position, as imports were revised down less than exports. Canada’s import data are less robust than usual this month, due to a transition to a new digital invoicing system at the border (CBSA Assessment and Revenue Management, CARM).