Canada’s trade balance shifted to a surplus in March, driven by higher crude oil prices and increased demand for gold, leading to a significant rise in exports while imports decreased, according to recent data. Statistics Canada reported a surplus of $1.78 billion in March, a turnaround from a $5.11 billion deficit in the previous month.
This marked the first surplus for Canada in six months, attributed to the rise in crude oil prices due to the conflict in Iran, which boosted export values. Despite a decrease in gold prices, strong global demand for the precious metal contributed to further export growth.
Analysts, who had anticipated a deficit of $2.88 billion, were surprised by the positive trade balance. Total exports surged by 8.5% to $72.8 billion, with a notable 24% increase in metal and non-metallic products reaching a record high. Energy exports also saw a significant rise of 15.6%, reaching the highest level since September 2022, as per StatsCan.
Excluding these categories, Canadian exports saw a modest 1.1% increase in value terms but experienced a slight dip of 0.3% in volume terms. Following a substantial 24.9% increase in February, motor vehicle and parts exports grew by 4.5% in March, as reported by the statistics agency.
While higher crude oil prices and enhanced shipments of passenger cars and light trucks boosted exports to the U.S. by 8.3% to $48.51 billion in March, imports from the U.S. decreased by 1.2% to $41.44 billion. This led to Canada’s trade surplus with the U.S. hitting a six-month high at $7.1 billion, despite the share of exports to the U.S. dropping to a historic low of 66.7%.
In contrast, exports to countries other than the U.S. reached a new peak in March, with a 9.1% increase, while imports from non-U.S. countries declined by 2.2%, as per the data. The Canadian dollar experienced a minimal 0.03% increase to 1.3620 post the trade data release, as money markets are factoring in the likelihood of two 25 basis point rate cuts by the Bank of Canada by year-end.