Canada: Trade data signals that demand may be slowing - NBF

Kyle Dahms, analyst at National Bank of Canada, points out that the decline in imports could be reflecting a slowdown in the demand and noted that goods trade may contribute less to growth in Q3.

Key Quotes:

“While the headline for the Canadian goods trade balance improved slightly in September, it does little to obfuscate some of the weaker details of this trade report. The August balance which was initially reported as being in surplus territory (+C$0.53 bn), was downwardly revised to -C$0.55 billion after an uncommon late shipment of high value ships.”

“September’s improvement in the trade balance stems mainly from this August blip in ship imports. Excluding that blip, imports would have risen 0.8% in September. That said, imports have now fallen in four of the last six months in volume terms, an indication that demand may be slowing in the country.”

“Looking at the quarterly perspective, two-way trade was down. Real imports declined 7.1% annualized in the third quarter while exports posted a 1.8% ann. decline. That is consistent with our call for a slowdown in GDP growth in Q3 around potential.”