Canada experienced a turnaround in its trade balance in March, shifting from a deficit to a surplus driven by increased exports due to higher crude oil prices and strong demand for gold. Statistics Canada reported a surplus of $1.78 billion for the month, a significant improvement from the previous month’s $5.11 billion deficit.
This marked the first surplus in six months for Canada, mainly attributed to the rise in crude oil prices influenced by the conflict in Iran, boosting export values. Despite a decrease in gold prices, global demand for the precious metal contributed to further export growth.
Analysts had predicted a deficit of $2.88 billion, but total exports surged by 8.5% to $72.8 billion in March. Metal and non-metallic product exports saw a substantial 24% increase to a record high, while energy exports rose by 15.6%, reaching their highest level since September 2022.
Excluding these categories, overall export values increased by a modest 1.1%, with a slight 0.3% dip in volume terms. Following a 24.9% growth in February, exports of motor vehicles and parts rose by 4.5% in March.
Canada’s exports to the U.S. increased by 8.3% to $48.51 billion in March, led by higher crude oil prices and expanded shipments of passenger cars and light trucks. Meanwhile, imports from the U.S. decreased by 1.2% to $41.44 billion, resulting in a trade surplus of $7.1 billion with the U.S. – the highest in six months. However, Canada’s share of exports to the U.S. dropped to a historic low of 66.7%.
In contrast, Canadian exports to countries outside the U.S. reached a new peak in March. Exports to non-U.S. nations surged by 9.1%, while imports from non-U.S. countries declined by 2.2%.
Following the release of the trade data, the Canadian dollar saw a minimal 0.03% increase to 1.3620. Market expectations suggest the possibility of two 25 basis point rate cuts by the Bank of Canada by the year’s end.