Canada’s merchandise trade deficit was $2.45 billion in July as both imports and exports continued to post strong gains, but remained below pre-pandemic levels, Statistics Canada said Thursday.
The result compared with an updated deficit figure of $1.59 billion for June. The agency’s initial estimate for that month had been a deficit of $3.19 billion for the month.
Economists on average had expected a deficit of $2.5 billion for July, according to financial markets data firm Refinitiv.
“This report provides more evidence that Canada’s economy is recovering from the pandemic more quickly than we had originally expected,” Paul Ashworth, chief North America economist for Capital Economics, wrote in a brief note.
“Overall, while trade is still a little shy of pre-pandemic levels, the bulk of the losses during the lockdowns have already been reversed.”
Compared with February, the month before the pandemic brought the economy to a near halt, Statistics Canada said imports were down 4.1 per cent and exports were off 6.0 per cent.
The motor vehicles and parts product category helped boost both imports and exports in July as the auto industry adjusted to the impact of COVID-19 by ramping up production after shutting down earlier this year and going through a shorter-than-usual shutdown period in the month, Statistics Canada said.
Imports for July rose 12.7 per cent to $47.9 billion as imports of motor vehicles and parts increased 50.3 per cent, while exports rose 11.1 per cent to $45.4 billion as exports of motor vehicles and parts increased 37.0 per cent.
In volume terms, imports rose 11.2 per cent for July, while exports gained 8.6 per cent.
The overall increase in the trade deficit came as Canada’s trade surplus with the United States increased to $2.9 billion in July compared with $2.7 billion in June.
Meanwhile, Canada’s trade deficit with countries other than the United States increased to $5.3 billion in July compared with $4.3 billion in June.
Monthly service exports rose 0.6 per cent to $8.7 billion in July, while service imports edged up 0.2 per cent to $8.5 billion.
Statistics Canada said the trade deficit with the world for goods and services combined was $2.2 billion in July.
The Canadian Press
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