Canada’s trade deficit shrinks to $677 million in May

Statistics Canada announced that exports increased 6.7 percent while imports decreased a further 3.9 percent

Statistics Canada announced that the country’s merchandise trade deficit with the world narrowed from $4.3 billion in April to $677 million in May.

The Federal agency says that, following historic declines in April that saw exports and imports lose more than one-quarter of their monthly value due to the COVID-19 pandemic, exports increased 6.7% in May, mainly reflecting the resumption of production in the auto industry as well as higher crude oil prices. Meanwhile, imports decreased a further 3.9%, reflecting supply challenges at a time when various economies around the world were progressively re-opening.

Exports reached $34.6 billion in May. Increases were observed in 8 of 11 product sections and non-energy exports were up 5.6%. However, on a year-over-year basis, total exports were down 34.1%.

Total imports declined to $35.3 billion, with 7 of 11 product sections decreasing. On a year-over-year basis, total imports have lost almost one-third of their value.

On a global perspective, Canada’s trade deficit with countries other than the United States narrowed from $5.5 billion in April to $3.5 billion in May, the smallest deficit since December 2016. Imports from those countries were down 10.1% in May. South Korea (motor vehicles) and Japan (motor vehicles) contributed the most to the import decline in May. Exports to countries other than the United States rose 2.4% in May, principally on higher exports to China (iron ore and crude oil) and France (aircraft and canola).

Exports to the United States were up 8.9% in May to $23.2 billion, which still represented a 40.0% decline compared with May 2019. Motor vehicles and parts and crude oil contributed the most to the rise in exports to the United States in May. Imports from the United States increased 1.2% to $20.4 billion, which represented a 39.0% year-over-year decrease.

As a result, Canada’s trade surplus with the United States widened from $1.2 billion in April to $2.8 billion in May.