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Data released on Tuesday showed the Canadian merchandise trade deficit came in at CAD 2.45 billion, slightly above expectations. Jocelyn Paquet, analysts at the National Bank of Canada points out that the report came in weaker than expected, showing international trade in goods stalled in August.

Key Quotes:

“While the Canadian economy continued its reopening process in August, international trade in goods stalled. Total merchandise exchanges (exports + imports) with the rest of the world cooled 1.1% and remained 6.1% below their pre-pandemic level.”

“On a more positive note, exports to the U.S. rose 1.0% thanks in part to a sharp gain for lumber, the latter reflecting strong demand from homebuilders South of the border.”

“The merchandise trade report came in weaker than expected, with the plateauing of goods exchanges happening sooner than anticipated. With governments all around the world re-introducing social distancing measures to prevent the spread of the coronavirus, international demand could weaken later this year after rebounding strongly in Q3, something that would weigh on exports. With Canada dealing with its own second wave of COVID-19 infections, the recovery in imports may also lose steam.”