High global energy prices are driving inflation but also continue to produce high trade surpluses for Canada, according to new data from Statistics Canada.
The national statistical agency reported that Canada’s merchandise trade surplus came in at $5.0 billion in June, which marked a modest increase from May after that month’s data was revised down to $4.8 billion from $5.3 billion.
Thanks to the revision to May’s numbers, June marked the highest monthly surplus since 2008, and it also represented the sixth consecutive monthly surplus.
“While the streak of surpluses and solid headline are positives, it is entirely due to higher commodity prices, particularly in energy, as the real trade balance deteriorated for a third consecutive quarter,” said BMO Economics in a research note.
Exports hit a new record high in June ($69.9 billion) “as the energy segment once again benefited from higher prices and uncertainty surrounding global oil supply,” National Bank Financial Inc. (NBF) reported.
As a result, energy products accounted for 30.0% of total exports in June, NBF said, noting that this is a record too.
The energy sector also drove higher imports, NBF noted, as natural gas, refined petroleum products and crude oil imports all rose notably.
Alongside energy, exports in the mining and consumer goods sectors were also strong in June.
Conversely, reduced demand for construction materials in the U.S. hit lumber prices and exports.
While the merchandise trade surplus rose, the deficit in services trade also grew from $1.1 billion in May to $1.3 billion in June, as both imports and exports of services increased, mainly due to increased travel activity, StatsCan reported.
As a result, the overall trade balance remained stable in June.
Looking ahead, CIBC World Markets Inc. said it anticipates the trade surplus narrowing, reflecting recent declines in oil prices.