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Monthly Trade Report – June 2022

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Highlights

There was broad-based trade growth in June as imports and exports each increased by 1.9%. On a quarterly basis, both imports and exports rose 11% in the second quarter.

Goods exports were up 2.0% in June, driven by energy products which represented 30% of the value of goods exports—a new record high for this product group. Non-energy products also grew 1.4%. Partially offsetting this growth was a decrease in lumber exports due to a decline in U.S. housing starts.

The expansion in goods imports (1.7%) was driven by strong growth in energy products and the aircraft and other transportation equipment category, but was partially offset by lower imports of motor vehicles and parts due to supply chain issues.  

By destination, there was a notable large increase in goods exports to China (+15.8%) driven by coal, copper and potash.

Gains in services trade were broad-based as commercial services, travel, and transport all experienced growth. However, travel services exports and imports remained below pre-pandemic levels.

This strong export story is not simply due to prices. In fact export prices actually dropped 0.3%, a reversal from recent months’ trends. Stripping out the effect of prices goods export volumes increased 2.2%. The opposite is true for imports which experienced substantial price increases while volumes dropped 0.2%.   

Data: Statistics Canada Tables 12-10-0011-01 and 12-10-0144-01. Balance of payments basis, seasonally adjusted.

Industry view

In June, exports increased in 8 of the 11 product sectors, and in 3 of the 4 services sectors. Goods exports increased 2.0% to $69.9 billion, the sixth consecutive monthly increase. On a quarterly basis, goods exports rose 12.3% in Q2, the strongest growth since the rapid recovery experienced in Q3 2020. Exports of energy products were a major driver in the growth, increasing 3.2% in June and accounted for 30% of goods exports, an all time record share. However, non-energy products also contributed to growth, growing 1.4% in June. Exports of metal and non-metallic mineral products rose 6.5% on the strength of unwrought gold exports, while consumer goods increased 6.3% with strong growth from pharmaceutical products. Partially offsetting these gains was a decrease in forestry products and building and packaging materials (-6.6%) as housing starts declined in the U.S. Services exports were up 1.5% to $12.8 billion, with growth in travel (2.1%), commercial (1.2%), and transportation (2.2%). Exports of travel services were still 6.5% below pre-pandemic levels. On a quarterly basis, services exports were up 7.0% to $37.6 billion, boosted by growth in travel services (26.7%).

In June, imports decreased in 6 of the 11 product sectors, but increased in 3 of the 4 services sectors. Despite experiencing declines in a large number of product sectors, total goods imports increased 1.7% in June to $64.9 billion, the fifth consecutive monthly gain. On a quarterly basis, goods imports rose 10.9% in Q2. Energy products (+22.3%) contributed the most to the gain in June. Another sector that experienced a large increase was aircraft and other transportation equipment and parts (+39.7%). Partially offsetting these gains were lower imports of motor vehicles and parts (-6.8%). Large monthly variations in the trade of motor vehicles are due to supply chain issues. Imports of services increased 2.8% to $14.0 billion, with gains in travel (5.6%), commercial (2.4%) and transportation (1.6%). Imports of travel services were still 41.9% below pre-pandemic levels. On a quarterly basis, services imports increased 12.3% to $41.3 billion in Q2, supported by growth of travel services (56.3%).

Data: Statistics Canada Tables 12-10-0121-01 and 12-10-0144-01. Balance of payments basis, seasonally adjusted.

Trading partners

Exports to the U.S. rose 1.2% in June, while imports from the U.S. were up 2.6%. Notable increases included energy products and pharmaceutical products, but this was partially offset by a decline in lumber exports. Imports from the U.S. were supported by energy products (motor gasoline, crude oil), and aircrafts. As a result, Canada's goods trade surplus with the U.S. narrowed slightly from its record high of $13.6 billion in the previous month.

Exports to non-U.S. destinations rose 4.5% in June to $16.4 billion—a record high. Notable increases were observed in exports to China (coal, copper and potash), Australia (pharmaceutical products) and the Netherlands (pharmaceutical products). Imports from countries other than the U.S. increased slightly (+0.2%) in June. Notable increases in imports were observed coming from India (various products), the United Kingdom (motor gasoline), Switzerland (non-ferrous metals) and Brazil (various products). However, these gains were almost entirely offset by notable declines in imports from Germany (motor vehicles) and Saudi Arabia (crude oil). The goods trade deficit with non-U.S. countries narrowed to $8.2 billion in June from $8.8 billion in May.

Data: Statistics Canada Table 12-10-0011-01. Balance of payments basis, seasonally adjusted.

Prices and volumes

In June, merchandise export volumes increased 2.2%, while prices dropped by 0.3%—the first drop in prices since December 2021. There were notable increases in the volume of exports of metal and non-metallic mineral products (12.1%) and consumer goods (8.0%). Motor vehicles and parts posted the largest drop in export volumes at 2.4%. One of the key drivers in the overall drop in export prices was the 5.3% decline in the export prices of  forestry products. Depressed demand for construction in the U.S. is largely responsible for lower lumber prices.

In contrast to exports, merchandise import volumes dropped by 0.2% in June, while prices climbed by 2.0%. Motor vehicles and parts were the largest contributor to the drop in overall import volumes, declining 8.2% in June. Mitigating these declines were increases in import volumes in the aircraft and other transportation equipment (38.7%) and energy products (10.0%). In terms of import prices, energy products led the way with a monthly growth of 11.1%, followed by metal ores and non-metallic minerals with a growth of 2.7%. The only sector which posted a decline in import prices in June was electronic and electrical equipment at -0.1%.

The average West Texas Intermediate (WTI) crude oil price rose 4.4% to reach $US114.34 per barrel in June.

After deprecating in the previous month, the Canadian dollar gained 0.2 US cents relative to the American dollar. The average monthly exchange rate for Canadian to U.S. dollar was 0.78 in June. 

Data: Statistics Canada Table 12-10-0128-01. Balance of payments basis, seasonally adjusted

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