Canada’s trade gap reached C$1.1 billion ($847 million) in November after a multi-day rail strike disrupted transportation of key goods, causing exports to drop for a third straight month and raising concerns about the strength of the domestic economy.
The headline figure slightly beat economist expectations for a C$1.2 billion trade deficit, but the gap only narrowed because October’s numbers were revised to a C$1.6 billion deficit from an originally reported C$1.1 billion deficit. Exports fell 1.4% on the month, led by shipments of energy products.
The soft trade report follows a series of weak economic data releases over the past several weeks, potentially adding to pressure on the Bank to Canada to consider an interest rate cut in the first half of 2020.
“Overall, the trade data add to the mounting evidence that Q4 GDP growth is likely to be much weaker than the Bank of Canada’s last MPR projections—and maintains our expectation that the Bank will move to cut the overnight rate target in the first half of 2020,” Brett House, deputy chief economist at Bank of Nova Scotia in Toronto, said by email.
Canada’s currency extended declines after the report, falling 0.3% to C$1.3011 against its U.S. counterpart at 8:56 a.m. Toronto time. Two year government bond yield fell 1 basis point to 1.63%.
