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Data released today showed that the goods trade deficit narrowed in June in Canada. According to National Bank of Canada’s analyst Kyle Dahms, goods trade likely contributed to growth in Q2.

Key Quotes:

“Canada’s merchandise trade deficit narrowed from C$2.7bn in May to C$0.6bn in June. Nominal exports jumped 4.1%, while imports edged down 0.2%.”

The goods trade surplus with the U.S. advanced C$0.8bn to C$4.1bn, the highest since April of last year. Terms of trade were the best since November 2014. In real terms, exports rose 2.2% while imports fell 1.2% in June.”

“Trade deficit was much lower than expected in June. The narrowing to the smallest deficit since January 2017 was in large part due a surge in exports to an alltime high.”

“It’s unclear, however, if the overall export surge can be sustained. Tense trade relations may have caused American importers to stock up as evidenced by the Canadian trade surplus with the U.S. jumping to the highest since April last year.”

“The advance in real exports, coupled with the retreat in real imports in the second quarter should allow trade to add to GDP in Q2 after five negative contributions in a row.”