Canada experienced a trade deficit of $1.26 billion in September, exceeding expectations, as a decline in imports was insufficient to counterbalance a decrease in exports, according to data released on Tuesday.
This marks the seventh consecutive month of trade deficits, primarily driven by reduced exports to key trading partners, excluding the United States, as reported by Statistics Canada.
The September figures reflect an increased reliance on estimations due to an ongoing digital transition at the Canada Border Services Agency Assessment and Revenue Management, which supplies most of the trade data to Statscan.
Analysts surveyed by Reuters had forecasted a deficit of $800 million, while Statscan significantly revised the August trade deficit to $1.47 billion from an earlier estimate of $1.1 billion.
Exports saw a slight decline of 0.1 percent, with the most significant impact stemming from a 5.4 percent drop in shipments of metal and non-metallic mineral products, particularly a 15.4 percent decrease in unwrought gold.
The overall decrease in exports was attributed to lower prices for metals and energy products, with the total value of exported goods falling by 1.5 percent, although in volume terms, exports increased by 1.4 percent.
Imports fell by 0.4 percent in September, remaining relatively stable in volume. The most notable decline was in metal and non-metallic mineral product imports, which dropped by 12.7 percent, significantly contributing to the overall decrease.
This reduction in imports reflects a weak demand environment in Canada and sluggish growth prospects, exacerbated by a 23-year high interest rate, which the Bank of Canada began to lower in June.
Since then, the Bank of Canada has reduced its key policy rate at four consecutive meetings, bringing it down to 3.75 percent.
The next monetary policy decision from the Bank of Canada is scheduled for December 11, with money markets indicating a 47 percent likelihood of a 50-basis point cut.
As of 1333 GMT, the Canadian dollar strengthened by 0.18 percent to 1.3876 against the U.S. dollar, equivalent to 72.07 U.S. cents. Yields on two-year government bonds increased by 2.89 basis points to 3.134 percent.
Total exports reached $63.88 billion, while imports amounted to $65.14 billion.
In September, Canada’s trade surplus with the United States, which represents more than 75% of its overall exports, grew to $8.29 billion, up from $7.82 billion the previous month. Imports from the United States, constituting 60% of all Canadian imports, saw a month-on-month increase of 0.8%.