Canada’s trade gap reached $1.1 billion in November after a multi-day rail strike disrupted transportation of key goods, raising concerns about the strength of the domestic economy.

The headline figure slightly beat economist expectations for a $1.2 billion trade deficit, but the gap only narrowed because October’s numbers were revised to a $1.6 billion deficit from an originally reported $1.1 billion deficit.

The soft trade report follows a series of weak economic data releases over the past couple weeks, potentially putting pressure on the Bank to Canada to consider an interest rate cut in the first half of 2020.

Key Insights

  • The report paints a picture of a fragile trade backdrop in Canada and while part of the weakness is attributable to the rail strike, it will be hard for policy makers to shrug this off given the recent disappointing numbers across jobs, manufacturing and retail sales reports
  • One of the few bright spots in the report was record shipments to the U.K., mostly gold and crude. Excluding precious metals, Canada’s export volumes fell 4.3 per cent in November, the largest monthly drop since 2009
  • October’s trade deficit was revised to $1.6 billion after Statistics Canada made some revisions to the way it measures shipments of high-value transactions such as art

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  • Canada’s trade surplus with the U.S. narrowed to $4.2 billion as exports decreased 3.3 per cent and imports fell 1.1 per cent; Canada’s trade deficit with China narrowed to $1.9 billion
  • The CN rail strike in November contributed to an export decrease of 1.4 per cent to $48.7 billion. Energy products led the decline, down 7.4 per cent on crude shipments following a pipeline rupture in late October
  • Declines in imports -- down 2.4 per cent to C$49.8B -- were widespread, with 10 of 11 categories posting decreases, led by aircraft and other transportation equipment
  • Exports and imports declined on both a nominal and a volume basis

--With assistance from Erik Hertzberg.