Today’s trade balance report from Canada showed an increase in exports that according to National Bank of Canada analyst Jocelyn Paquet, hints at a strong contribution from trade to GDP growth during the second quarter.
Key Quotes:
“The Canadian trade numbers came in much better than expected in May as the merchandise trade balance unexpectedly swung back into surplus territory for the first time since July of last year. Exports spiked in the month, capping a 15.0% progression this year, the best performance over a 5-month period in more than a decade.”
“Some of the export gains in May resulted from temporary factors and are thus likely to be partly reversed in coming months. Auto exports, for instance, surged as activity resumed at some assembly plants following atypical shutdowns in April.”
“Trade should nonetheless contribute strongly to GDP growth in Q2. Real exports are on track to expand an annualized 15.4% in the quarter, thanks to a 4.0% surge in May, the steepest monthly advance observed since August 2016. Import volumes, for their part, should come in at roughly the same level as in Q1. Overall, the trade data is consistent with our call for a GDP print of around 2.5% in the second quarter of the year.”
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