Trade data released on Thursday in Canada, the merchandise trade surplus narrowed from 2.56 billion Canadian dollars in June 780 millions in July. According to National Bank of Canada analysts the trade surplus shrank as auto imports benefit from reprieve in chip shortages.
Key Quotes:
“The merchandise trade surplus shrank more than expected in July as imports expanded the most in 4 months. About two thirds of the increase in inbound trade was due to a steep rebound in the motor vehicles/parts category; excluding the period immediately following the arrival of COVID-19 in Canada, the monthly increase in imports in that segment was the second largest in data going back to 1988.”
“Looking at exports, the headline number could have been stronger had it not been for a 12.7% retreat in the forestry products/building equipment segment. This decline was somewhat expected given the significant drop in lumber prices during the month. Further drawbacks may be in store in this segment as activity on the North American real estate market starts to moderate. Excluding lumber, exports were up a healthy 2.0%.”