The Commerce Department said on Friday the trade gap rose 3.4 per cent to $43.9-billion, a sign that the worst of the drag from a stronger dollar was far from over.
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Desjardins Capital Markets economist Jimmy Jean said the October trade report was a disappointment, particularly because of the widespread decline in exports.
“Revisions to the prior month’s data suggest that net trade subtracted 0.4pp from Q3 growth, more than the -0.2pp contribution reported in the second estimate of GDP”. When adjusted for inflation, the deficit increased to $60.33 billion from $57.37 billion in September.
Canadian exports to the US, which makes up about three quarters of Canadian exports, declined 2.8% in October, while imports from the USA edged down 0.3%. The decline was seen in both goods and services, with imports of industrial supplies and materials the leading the pullback.
Exports to the United States, which accounted for 74.9 percent of Canada’s global total in October, fell by 2.8 percent, the biggest month-on-month fall since the 3.4 percent slump recorded in May 2013. US producers have also had to confront economic weakness in key overseas markets such as Europe and China.
Exports of farm, fishing and intermediate food products fell 7.3% on lower volumes and sales overseas of basic industrial chemical, plastic and rubber products dropped 5.6%. Petroleum imports were the lowest since November 2003, reflecting increased domestic energy production and lower oil prices.
Despite the strong dollar boosting American consumers’ buying power, imports slipped 0.6 percent to 228.0 billion.
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The October increase in the goods and services deficit reflected an increase in the goods deficit of $2.1bn to $63.1bn and an increase in the services surplus of $0.6bn to $19.2bn.
