Data released on Thursday showed the Canadian trade balance swung back to surplus. Analysts at the National Bank of Canada point out it is the largest surplus since September 2008. On a quarterly basis, still trade in goods likely weighed on growth during the second quarter, warned analysts. 

Key Quotes:

“The merchandise trade balance swung back into surplus territory in June, reaching a level not seen since September 2008. Excluding the period immediately following the arrival of COVID-19 in Canada, the monthly increase in exports was the second largest in data going back to 1988.”

“International shipments were boosted by a solid showing in the energy segment, with the latter benefiting from higher prices and increased demand. The monthly gain hoisted energy exports 14.9% above their pre-pandemic peak (2019M12). But the gains in exports were not limited to energy.”

“The trade surplus with the U.S. reached its highest level in 13 years in June. Recall that our neighbors to the south began to reopen their economy earlier, something which allowed American demand for Canadian products to recover.”

“Turning to quarterly data, trade in goods likely weighed on Canadian growth in Q2, as real exports (-4.7% q/q) fell faster than real imports (-0.5%). Alternatively, the strong expansion in import volumes in the machinery equipment category (+4.0% q/q) bodes well for investment spending in the second quarter of 2021.”

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