Statistics Canada reported that Canada recorded a C$1.31 billion international merchandise trade deficit in December, a reduction from a revised C$2.59 billion shortfall in November. The December outcome was influenced by a strong increase in exports of metals and non-metallic mineral products.
Total exports rose 2.6% to C$65.63 billion in December. Within the export mix, shipments of metals and non-metallic mineral products expanded by 18% month over month. Exports of unwrought gold were a notable contributor, rising by more than 37%, a move that Statistics Canada attributed in part to higher gold prices.
When the metals and non-metallic minerals category is excluded, Canadian exports edged down 0.2% in December. Measured in volume terms, total exports increased by 1.4%.
Imports grew 0.6% to C$66.93 billion, with six of 11 product sections registering gains. The rise in imports was led by purchases of gold, passenger vehicles and energy products.
Trade with the United States
Exports to the United States, Canada's largest trading partner, rose 1.1% in December and represented just over 67.4% of total exports. That compares with a 76.2% share a year earlier. Statistics Canada noted this was the first three-month period in which the percentage of outbound shipments to the United States increased in month-over-month terms; nevertheless, the U.S. share of Canadian exports fell to its lowest level since data collection began, with the exception of two pandemic-affected months in 2020.
The share of exports to the U.S. was 68.4% in November and 67.5% in October. On the import side, purchases from the United States rose 3.5% in December, trimming Canada's merchandise trade surplus with the United States to C$5.7 billion, down from C$6.5 billion in November.
Trade with countries other than the United States
Exports to destinations other than the United States continued to rise, reaching an all-time high in December. Exports of gold to the United Kingdom accounted for a significant portion of those gains, Statistics Canada said. Meanwhile, imports from countries other than the United States fell 3% in December, and Canada's trade deficit with non-U.S. countries narrowed to $7 billion in December from $9 billion in November.
Context within the data
Economists had expected roughly a C$2 billion merchandise trade deficit for December. The actual C$1.31 billion shortfall therefore represented a smaller gap than forecast, owing primarily to the outsized contribution of metals and non-metallic mineral exports, and in particular unwrought gold.
Statistics Canada’s breakdown highlights the concentrated nature of the export gains in December and the differing directions of trade flows with the United States versus other trading partners.
Key takeaways
- Canada's merchandise deficit narrowed to C$1.31 billion in December as exports rose faster than imports.
- Metals and non-metallic mineral products - led by unwrought gold - were the primary drivers of export growth in December.
- The proportion of Canadian exports destined for the United States declined to just over 67.4%, its lowest level on record aside from two pandemic months.