Canada’s merchandise trade deficit widened more than forecast as crude oil prices tumbled, evidence the nation’s economic expansion is being curbed by an energy slump.
Oil export prices dropped 15 percent in October and the volumes shipped fell 0.9 percent, reducing total shipments abroad for a third straight month, Statistics Canada said Thursday from Ottawa. The trade deficit grew to C$1.17 billion ($872 million), and the September shortfall was more than doubled after a revision to C$891 million.
The oil pinch led the Bank of Canada to pare back optimism about lifting interest rates to neutral at its latest decision Wednesday, and will likely dominate Prime Minister Justin Trudeau’s talks this week with provincial leaders. Earlier this month, Alberta Premier Rachel Notley ordered oil producers to cut output by 8.7 percent starting in January after the discount on Western Canadian Select to U.S. benchmark prices widened to a record $50 a barrel.
Economists at most major Canadian banks have cut economic growth forecasts for next year because of reduced oil revenue and investment. Some also predict Governor Stephen Poloz will refrain from raising borrowing costs at the central bank’s next meeting in January.
Exports had climbed to a record high in July even as the U.S. threatened to scrap the North American Free Trade Agreement, which along with unemployment near record lows had been building the case for tighter monetary policy.
- Crude oil exports fell 16 percent in October, the biggest decline since February 2016
- Total exports fell 1.2 percent, with a 4.4 percent gain in automobiles helping ease the energy losses
- Imports fell 0.6 percent, the fourth decline in five months. Energy showed up here as well with a 14 percent fall in crude oil diluents brought in from the U.S. Car and light truck imports also fell 5.8 percent
- Canada’s trade surplus with the U.S. narrowed to C$3.1 billion from C$4.3 billion on the month, the smallest since March
- The volume of exports, which strip out price changes, rose 1.2 percent in October. Import volumes were little changed
- The higher September trade deficit came as crude oil exports were reduced, Statistics Canada said.