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Jocelyn Paquet, from the National Bank of Canada, points out that the fact that the trade balance changed to surplus was as a consequence of a decline in imports.  

Key Quotes:

“Canada’s merchandise trade balance swung back into a surplus position for the first time since December 2016, coming in a +C$0.53 billion following a -C$0.19 billion print the prior month (see chart on the left).”

“In real terms, imports declined 1.5%. while exports retreated 0.7%.”

“The return of the Canadian goods trade balance in positive territory in August will probably attract a lot of attention and may camouflage what was otherwise a rather weak trade report. To be sure, the overall merchandise balance improved mainly because of a drop in imports. True, part of that decline was caused by temporary impediments.”

“The drop in the consumer goods segment (-7.3% in real annualized terms up to now in Q3) was more concerning, as it may reflect a slowdown in consumption.”

“Although exports did not fare much better in the month, the fact that they declined at a slower pace than imports (in real terms) all but confirmed that trade will contribute to GDP growth for the second quarter in a row in Q3. In the short term, we wouldn’t be surprised to see the goods trade balance fall back into red numbers as our U.S. clients will no longer see a need to stockpile Canadian goods following the agreement on a new North American free trade deal.”