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The Canadian merchandise trade deficit widened in September above expectations to CAD 3.25 billion. According to Jocelyn Paquet, analyst at National Bank of Canada, goods trade likely to have weighed on Q3 growth.

Key Quotes:

“Exports rose for the fourth time in five months, supported by a steep increase in the forestry products/building material category. The segment benefited from a 23.0% surge in lumber shipments (to a 14-year high of C$ 1.6 billion), the latter reflecting higher prices and strong demand from homebuilders south of the border.”

“On the imports side, the energy products category was the biggest contributor, with crude oil imports surging 87.1%.”

“Turning to quarterly data, trade in goods likely contributed negatively to Q3 growth as real exports (+95.0% annualized) expanded at a slower pace than real imports (147.7%, see chart on the right). 

“With governments all around the world re-introducing social distancing measures to prevent the spread of the coronavirus, international demand could weaken, something that would weigh on exports going forward. With Canada dealing with its own second wave of COVID-19 infections, the recovery in imports may also lose steam.”