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Canada's trade deficit up in September because of one very large transaction

November 8, 2016

Statistics Canada announced that the country's merchandise trade deficit with the world widened from $2.0 billion in August to a record $4.1 billion in September.

According to the federal agency Canada's imports rose 4.7% to a record $47.6 billion in September, and a single exceptionally large transaction accounted for most of the increase.

An increase in imports of industrial machinery, equipment and parts accounts for the overall rise in imports in September. Following eight consecutive monthly decreases, imports for this section rose 71.4% to a record $6.9 billion in September. The gain was attributable to one large import of a module from South Korea destined for the Hebron offshore oil project in Newfoundland and Labrador. Excluding the $2.9 billion change in imports of industrial machinery, equipment and parts in September, total imports would have decreased 1.6%, resulting in a trade deficit of $1.2 billion.

Following a record high in August, imports of motor vehicles and parts fell 2.6% to $8.9 billion in September and imports of aircraft and other transportation equipment and parts decreased 13.7% to $1.3 billion. Imports of metal and non-metallic mineral products decreased 5.2% to $3.6 billion.

As for exports, they edged up 0.1% to $43.5 billion in September, with 6 of 11 sections recording gains. This was the fourth consecutive monthly increase. Higher exports of aircraft and other transportation equipment and parts, and energy products were partially offset by lower exports of metal and non-metallic mineral products. In September, exports excluding energy products were down 0.2%. Year over year, total exports decreased 1.2%.

Imports from countries other than the United States rose 15.9% to a record $18.0 billion in September. The main contributor was South Korea, up $2.9 billion to $3.4 billion, reflecting the large shipment intended for the above mentioned offshore oil project. Exports to countries other than the United States were up 2.3% to $11.2 billion.

Imports from the United States decreased 1.1% to $29.7 billion and exports were down 0.6% to $32.4 billion in September. Consequently, Canada's trade surplus with the United States widened from $2.6 billion in August to $2.7 billion in September.

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