Canada’s trade deficit grew to $2.5 billion in November, driven by the strongest growth in imports since July 2009, Statistics Canada said Friday.
The November trade gap figure widened from the $1.6 billion deficit seen in October.
RBC assistant chief economist Paul Ferley in a commentary that November’s trade figure was a surprise, as expectations had been for the deficit to shrink to $1.1 billion.
Statistics Canada said imports in November were up 5.8 per cent from October, while exports rose 3.7 per cent, both due largely to increased activity in the automotive industry.
Factoring out changes in prices, import volumes were up five per cent and export volumes grew by only 0.6 per cent.
“This was a disappointing report, but unlikely the start of a trend,” TD economist Dina Ignjatovic said in a commentary. “The strength in imports is suggestive of a return to normality in previously disrupted sectors such as autos.”
However, she added that the growth of imports against exports means that net trade will act as a drag on growth during the month.
Statistics Canada said imports of electronic and electrical equipment and parts, motor vehicles and parts, plus aircraft and other transportation equipment and parts contributed the most to the growth in November.
Higher exports of motor vehicles and parts and consumer goods contributed the most to the growth in shipments out of Canada.
Imports from the United States, which is Canada’s top trading partner, rose 6.5 per cent to $31.9 billion in November, while exports to the U.S. were up 5.4 per cent to $35.2 billion, led by passenger cars and light trucks.
Those changes drove Canada’s trade surplus with the U.S. decreased from $3.5 billion in October to $3.3 billion in November. Comparing November’s average exchange rate to that of October, the Canadian dollar lost one cent US relative to the American dollar.
The Bank of Canada may be disappointed in this report, but it is more than offset by this morning’s spectacular employment report, which points to a labour market with little slack,” Ignjatovic said. “As such, after this morning’s releases, the [central bank] will be inclined to move interest rates higher sooner rather than later.