Amid a decline in exports, Canada’s trade balance slipped back into deficit in November, according to new data from Statistics Canada.

Merchandise exports dipped by 2.3% in November to $64.4 billion, StatsCan reported, noting that a decline in energy exports was the primary reason.

At the same time, imports fell by 2.1%, and, as a result, the merchandise trade balance swung from a $130-million surplus to a $41-million deficit in the month.

In a research note, BMO Economics said some of the decline in the trade position “came from lower prices for both exports and imports,” adding that “the latter will help cool domestic inflation pressures.”

Additionally, BMO noted that a stronger Canadian dollar dampened the value of both imports and exports.

Prices and currency effects weren’t the only reason for the drop in trade; volumes declined too.

“On a volume basis, exports declined 1.3% while imports dropped 1.1%,” BMO said.

Alongside energy, exports of motor vehicles and auto parts also dropped in November, leaving international shipments in the auto sector down by 20.4% from their pre-pandemic level, even as supply chain conditions improved, National Bank Financial (NBF) noted in a research report.

“This suggests current setbacks could have more to do with a drop in demand than with lingering pandemic disruptions,” it said.

Looking ahead, BMO expects that trade will “add modestly to growth” for the fourth quarter.

This view was echoed by NBF, which said, “With one month of data still to come, trade in goods looks likely to contribute positively to GDP growth in the fourth quarter of the year, with real exports showing little movement and real imports tracking a small decline.”

Separately, StatsCan reported that Canada’s monthly deficit in services trade narrowed from $2.1 billion in October to $1.4 billion in November.

“Overall, exports of services increased by 2.0% to $14.1 billion, and imports declined by 2.3% to $15.5 billion,” the national statistical agency said.

Combining goods and services, Canada’s trade deficit edged down to $1.5 billion in November from $1.9 billion in October.