By Robb M. Stewart
OTTAWA--Canada swung back to a modest goods-trade surplus with the rest of the world in the first month of the year as imports fell to the lowest in almost two years and outpaced continued export weakness.
The country posted a merchandise-trade surplus in January of 496 million Canadian dollars, the equivalent of about $367 million, Statistics Canada said Thursday. That was ahead of the flat trade balance expected by economists.
December's deficit, the first since July, was revised wider by C$551 million to $863 million. Merchandise trade was essentially balanced in 2023, shifting to a slight deficit of C$2.13 billion from a surplus of roughly C$19.7 billion the year before.
Merchandise imports dropped 3.8% to C$61.79 billion in the latest month, while exports fell 1.7% to C$62.29 billion, the data agency said. On a price-adjusted, volume, basis exports were down 1.7% in January and imports fell 4.1%.
Imports of consumer goods declined 7.1% for the month, erasing a big chunk of the surge in December. For a second month, shipments of pharmaceutical products contributed the most to the movement, after high-value imports from the U.S. weren't repeated in January.
Imports of motor vehicles and parts also were down, a fourth consecutive monthly fall that followed a string of monthly increases to an all-time high in September. Imports of unwrought gold and other precious metals were down sharply following increases in the two previous months, in part as the high-value import of gold powder seen in December didn't continue into January, and there also was a decline in shipments of gold traded in the banking industry, Statistics Canada said.
Exports, meanwhile, fell for a third straight month with weakness across many segments, including a 1.3% drop in energy products for the month. Stripping out the energy sector, overall exports for the month were down 1.9% from December.
A drop in exports of metal and non-metallic mineral products led the decline in exports, though shipments of aircraft and other transportation equipment and parts also were notably lower, partly due to fewer aircraft deliveries to the U.S.
Total exports to the U.S., Canada's biggest export market by a wide margin, fell 1%, while imports were 1.7% lower. That widened Canada's surplus with its neighbor to C$8.79 billion after it narrowed to $8.58 billion the month before.
Exports to countries other than the U.S. dropped 4.2% in January, in large part with lower aircraft and pharmaceutical products exports to Italy, and declines in coal to China, nickel to Norway and crude oil to Germany. On the imports side, purchases from abroad were down 7.3%, in part with lower imports from China and South Korea.
When international trade in goods and international trade in services were combined, Canadian exports fell 1.7%, while imports declined 2.6%. As a result, Canada's trade deficit incorporating both goods and services narrowed to C$779 million from C$1.59 billion in December.
Strong exports in the last quarter of 2023 helped drive a 1% expansion in real gross domestic product, following a 0.5% contraction in the third quarter, though final domestic demand weakened with a large decline in business investment. The Bank of Canada on Wednesday left its policy rate steady at 5% and said it remains concerned about the persistence in underlying inflation.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
03-07-24 0855ET
