Merchandise trade surplus trends changing: Stats Can

OTTAWA — After peaking at $71 billion in 2001, Canada’s merchandise trade surplus has since dropped and hovered around $65 billion.

A new Statistics Canada study published today in the Canadian Economic Observer says, however, “this apparent stability masks several new trends in the commodity composition of this surplus.”

Five years ago, the trade surplus was rising because of gains in five of the seven largest sectors: consumer goods, autos, forestry, food and machinery and equipment. Now, the surplus is being sustained by gains in only two sectors, energy and industrial goods, according to Stats Canada.

Automotive and industrial goods are the two
most volatile sectors for posting trade surpluses

“The trade balance by sector reflects a country’s industrial structure and spending patterns. Since these underlying determinants usually change only slowly over time, sectoral trends in the trade balance typically persist for long periods. This is particularly true for Canada.”

Of the seven largest sectors, forestry, energy and agricultural products have always posted a trade surplus since 1971.

Autos and industrial goods are more volatile and were the only sectors that posted both surpluses and deficits over the past 35 years. Auto, for example, posted chronic deficits from 1972 to 1981. Since then, it has consistently posted surpluses, with the exception of 1986 and 1987.

The strong appreciation of the Canadian dollar after 2002 had a major impact on prices outside of energy and industrial goods, states the report. “Exports for the other five sectors actually rose in volume over the last four years, but these gains were offset by lower prices received by producers.”

Fuelled by the income generated from the commodity boom, consumers and businesses in Canada have gone on a spending spree, says Stats Canada.

“This has sent the deficit in consumer goods to new highs, while the deficit for machinery and equipment was the largest so far this decade. These deficits would have been even higher, if not for the dampening effect on prices of the rising exchange rate.”