Canada Posts C$2.09 Billion Goods Trade Surplus in October -- Update

By Kim Mackrael

OTTAWA--Canada recorded its largest merchandise trade surplus in almost a decade, as semiconductor shortages eased and automotive exports and imports both rose.

Statistics Canada said Tuesday the country in October posted a goods-trade surplus of 2.09 billion Canadian dollars, or the equivalent of US$1.64 billion. The consensus expectation was for a C$2.1 billion surplus, according to economists at TD Securities.

The data agency said the surplus in October was the largest since December 2011.

The previous month's trade data were revised, and now indicate the goods-trade surplus was C$1.42 billion, compared with the previous C$1.86 billion estimate.

Exports rose 6.4% in October to reach a record level of C$56.18 billion, while imports increased 5.3% to C$54.09 billion. On a volume, or price-adjusted, basis, exports rose 2.8% in October and imports rose 7%.

"This report adds to the evidence that the economy had strong momentum" at the start of the fourth quarter, BMO Capital Markets economist Benjamin Reitzes said after the release of October's trade data. However, he added that flooding and landslides on the country's west coast, which damaged transportation infrastructure last month, will likely weigh on November trade data.

The rebound in October exports was led by higher exports of motor vehicles and parts, which rose 30.8% in the month. The data agency said production stoppages related to semiconductor shortages continued to affect assembly plants in Canada in October, but were less pronounced compared with the previous month. Exports of energy products, meanwhile, rose 9.8% in the month, led by higher prices for crude oil.

October's advance in imports was largely the result of higher imports of motor vehicles and parts, which rose 27.2% in the month. Imports of consumer goods increased 4.5% in October, and imports of energy products rose 14.9%.

The merchandise trade data came on the heels of a stellar jobs report last week. The Canadian economy added a net 153,700 jobs in November, mostly in the private sector, and the unemployment rate dipped to 6% from the previous month's 6.7% reading.

The Bank of Canada is set to issue its next interest-rate decision Wednesday. While the central bank is widely expected to leave its key rate on hold this week, many economists anticipate that rate increases will begin in April, as long as the Omicron variant of Covid-19 isn't seen as posing too much of an obstacle to the country's economic recovery.

Write to Kim Mackrael at [e-mail]

(END) Dow Jones Newswires

12-07-21 1003ET