This is the first decline in exports in six months
Canada’s trade surplus sharply narrowed to $769 million in July from $4.2 billion in June, driven by a decrease in gold exports to the United States.
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Total exports decreased 2.3 per cent in July, the first decline in six months, according to Statistics Canada on Thursday. Exports of metallic and non-metallic mineral products were one of the categories that posted the largest declines — 8.5 per cent — due to lower purchases of Canadian-held gold by foreign residents and lower gold shipments to the United States.
The agency also said falling gold prices contributed to the decline in exports.
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Exports of energy products dipped 4.4 per cent in July due to a decrease in crude oil exports, both in prices and volumes. Crude oil prices bounced back in July, but they were below the average observed in June.
Total imports rose 2.2 per cent in July, driven by motor vehicles and parts, which rose by a record high of 11.4 per cent. Statistics Canada said July is usually the time when auto assembly plants temporarily close for maintenance, retooling and summer holidays, but the closures were less pronounced this year, especially in the U.S.
Andrew Grantham, a senior economist and executive director at CIBC Capital Markets, said the pullback in exports in July is a sign that economic growth is slowing in the third quarter after a second-quarter surge.
“A rise in imports is also technically a negative for gross domestic product (GDP), but likely represents restocking activity that will show up as a positive for inventories,” he said in a note on Thursday.
