Automotive Sector Leads December Rise in Imports and Exports

While Canada’s trade gap widened in December, activity in the automotive sector led a rise in overall trade.

According to Statistics Canada, Canada’s merchandise exports and imports both advanced in December on the strength of automotive products. Exports rose 1.7% and imports increased 1.8%. As a result, Canada’s trade deficit with the world widened to $246 million in December from $201 million in November.

The gain in imports in December represented the second consecutive monthly increase. Overall, imports remained 9.1% below the level registered in December 2008.

Led by passenger cars, exports to the United States rose 2.9% to $24.1 billion, surpassing the 2.0% gain in imports. As a result, Canada’s trade surplus with the United States grew to $3.7 billion in December from $3.4 billion in November.

Exports to countries other than the United States fell 1.8%, while imports from these countries increased 1.5%. Consequently, Canada’s trade deficit with countries other than the United States widened to $3.9 billion in December from $3.6 billion in November.

Exports

Exports of automotive products increased 8.1% to $4.5 billion, as volumes rose 11.3%. Exports of passenger cars increased 11.7% to replenish inventories of strong selling Canadian manufactured models. Exports of passenger cars have been on an upward trend since May 2009. Motor vehicle parts and trucks also posted gains in December.

Exports of machinery and equipment grew 3.4% to $6.3 billion, due to rising volumes. Higher exports of aircraft and industrial machinery were the main factors behind the increase. Declining exports of telecommunication equipment mitigated the gain in the sector.

Energy products exports were up 1.5% to $7.8 billion, the result of a 5.7% gain in prices, as volumes fell 3.9%. Exports of natural gas grew 5.8%, and have been rising since May 2009. Before this period, exports of natural gas had declined for 10 consecutive months, as inventories remained high as a result of weak demand. Exports of petroleum and coal products increased 5.0%, while exports of electricity declined 22.6%, moderating the growth in the sector.

Other crude non-metallic minerals largely accounted for the decrease in exports of industrial goods and materials, which fell 1.1% to $6.8 billion. Exports of nickel ores and precious metals also declined, while iron ores posted a gain.

Imports

Imports of automotive products increased 6.0% to $5.8 billion, continuing the upward trend that began in June 2009. Imports of motor vehicle parts increased 11.1%, reflecting the higher demand for vehicles from the United States. Imports of passenger cars grew 3.2%, led by imports of cars from overseas. Trucks and other motor vehicles also posted gains.

Imports of industrial goods and materials grew 3.0% to $6.3 billion as volumes increased 2.0%. Imports of metals in ores, namely iron ores, grew 17.1% and were followed by precious metals, which gained 12.9% in December.

Imports of energy products grew 5.4% to $3.3 billion as prices rose 7.2%. Imports of crude petroleum grew 17.0%, while imports of coal and other related products declined in December. The gain in imports of energy products represented the third consecutive monthly increase.

Imports of machinery and equipment fell 2.4% to $8.6 billion as imports of aircraft and other transportation equipment declined 16.6%. Other communication equipment, such as high definition flat panel televisions, smart phones and digital cameras, were also a factor behind the decline in the sector.