Merchandise Trade September 2024: Third quarter exports edge up as energy volumes support growth

Canada’s trade balance narrowed to $1.3 billion in September, falling short of market expectations. Nominal exports declined for the third consecutive month due to weaker prices, with September’s trade figures significantly impacted by fluctuations in metal trade and aircraft. Nevertheless, export volumes remained robust in the third quarter, supporting economic growth—primarily driven by energy exports bolstered by the Trans Mountain pipeline.

Headline

Canadian nominal merchandise exports edged down 0.1% in September. Merchandise volumes rose 1.2% on the month. Imports fell 0.4% only slightly narrowing the trade deficit from $1.5 billion to $1.3 billion. Import volumes were flat.

Key Takeaways

• Aircraft and other transportation equipment led export growth in September (+10.3%) as shipments spiked for aircraft in the last month of the quarter. Forestry products rose 5.3% as pulp and paper exports grew 12.2%, following rail transport disruptions and work stoppages in August. Motor vehicles and parts grew 1.9% in September with similar volumes despite maintenance at Ontario auto manufacturing plants the month earlier.
• Metal and non-metallic minerals was the largest negative contributor to nominal exports (-5.4%), with volumes also down 6.1% due to lower shipments of gold, silver, and platinum metals to major destinations like the United Kingdom and the United States. Nominal energy exports were down for the second consecutive month due to crude oil prices in September declining from $62/bbl in August to $56/bbl, despite higher volumes (+2.2%) supported by increased shipments by the Trans Mountain pipeline.
• Merchandise imports declined 0.4% in September due to lower imports of metals and non-metallic minerals (-12.7%). Imports of energy products grew 13.6% in September, mainly from increased imports of refined petroleum products, partially offsetting other declines in categories.
• Exports to the United States grew 1.6%, while exports to other countries declines significantly (-5.3%). Canada’s trade surplus with the U.S. grew from $7.8 billion to $8.3 billion in September.
• Services exports grew 1.6% in September lifting overall Canadian exports 0.2% m/m.

Implications

• Following 0.3% growth in the second quarter, nominal exports declined 0.2% in the third quarter mainly on prices, with real exports growing 0.3% on the quarter. Energy exports led the growth, in part due to increased shipments via the Trans Mountain pipeline.
• As real export growth (+0.3%) outpaces imports (-0.2%) in the third quarter, the net trade contribution to GDP improved compared to the second quarter, likely providing a positive boost to GDP, albeit by a small margin.