Canada’s trade surplus dips to pre-Y2K levels

OTTAWA — Canada’s merchandise trade surplus with the world shrank to its lowest level in nine years in December, as exports declined and imports edged up.

Exports fell 3.1 percent to $36.7 billion as only one sector — energy products — recorded gains, reports Stats Canada in its monthly survey.

Both exports and imports hit record highs in 2007, and merchandise exports to countries other than the United States rose dramatically.

However, the U.S. is Canada’s biggest trading partner, accounting for about three-quarters (76.4%) of Canada’s exports in 2007, down from 79.2 percent in 2006.

On the other hand, the share of export trade with the rest of the world rose from 20.8 percent to 23.6 percent.

Imports inched up 0.7 percent to $34.3 billion. Prices increased 3.4 percent, while volumes declined 2.7 percent. Energy products were the main factor behind the gain in imports, offsetting a decline in automotive products.

As a result, the December trade surplus narrowed to $2.4 billion, its lowest level since November 1998. The surplus with the United States narrowed to $6.1 billion, the second lowest level in 2007.

Exports Fall Despite Record Crude:

Widespread declines overshadowed gains in energy products, the only significant sector to record an increase in December. Industrial goods and materials and automotive products, not surprisingly, led the decline.

Falling to their lowest level in almost a decade, exports of automotive products shrank 8.7 percent to $5.7 billion. Passenger autos declined for the second month in a row, sinking 13.5 percent to $2.9 billion, while motor vehicle parts declined 5.2 percent to $1.9 billion.

After hitting a record high in July, exports of industrial goods and materials contracted 6.5 percent to $8.0 billion, the seventh decrease in 2007. Metals and alloys tumbled 10.8 percent, metal ores plunged 18.0 percent. By contrast, exports of chemicals and plastics increased 3.7 percent on the strength of organic chemicals and synthetic rubber and plastics.

Faced with diminished demand from the United States and increased pressure from the strong Canadian dollar, the forestry sector continued its downward trend for the ninth consecutive month, falling another 2.1 percent to $2.1 billion — its lowest level since February 1994.

Energy products, however, advanced 4.4 percent to $8.2 billion, the second consecutive monthly increase, on the strength of natural gas (up 13.7%) and crude petroleum (3.5%).