In July, Canada’s merchandise exports decreased 2.8%, while imports were down 1.8%. As a result, Canada’s merchandise trade surplus with the world narrowed from $4.9 billion in June to $4.1 billion in July. So far in 2022, trade surpluses have been observed in every month.

First monthly decrease in exports in 2022, amid lower prices

Following six consecutive monthly increases, total exports decreased 2.8% to $68.3 billion in July. Declines were observed in 6 of the 11 product sections. Since the beginning of 2022, the value of exports has risen by almost 20%, and higher prices were behind the bulk of that increase. However, a sharp decrease in prices drove export values down in July, while total exports in real (or volume) terms increased 1.7%, a third consecutive monthly increase.

In July, exports of consumer goods (-14.3%) decreased the most, with exports of pharmaceutical products (-49.1%) falling sharply after a surge in the previous month. In June, large quantities of medications for the treatment of COVID-19 were exported to the United States, Australia and the Netherlands. These shipments were not repeated in July. Lower exports of other types of drugs also contributed to the decline.

Imports of consumer goods decrease the most

Total imports fell 1.8% in July to $64.2 billion, the first decrease since January. Declines were observed in 7 of the 11 product sections. In real (or volume) terms, total imports decreased 1.4%.

Imports of consumer goods were down 4.2% in July, a third consecutive monthly decline. Decreases were observed in most subcategories, with imports of miscellaneous goods and supplies (-9.8%) retreating the most. This decrease in July was mainly because of lower imports of gold bars from the United States, which had risen in June. Imports of pharmaceutical products were also down in July, partly because of a decline in imports within the category “vaccines for human medicine other than for influenza,” which includes COVID-19 vaccines.

Imports of industrial machinery, equipment and parts (-6.0%) also decreased in July following a strong month in June (+7.6%). Lower imports of the product group “other industry-specific manufacturing machinery” were behind the decrease in July. Imports in this category had been rising lately, partly because of the imports of machinery and parts for the new liquefied natural gas terminal project currently being constructed in British Columbia. Shipments related to this project have fluctuated significantly from month to month, and imports in July were much lower compared with those observed in June. More imports for this project are expected in the months to come.

Exports to the United States decrease for the first time in seven months

Exports to the United States decreased 2.2% in July, partly because of lower exports of crude oil and pharmaceutical products. Meanwhile, imports from the United States increased 0.7%. As a result, Canada’s merchandise trade surplus with the United States narrowed from $13.3 billion in June to $11.8 billion in July. When the average exchange rates for June and July are compared, the Canadian dollar lost 0.8 US cents relative to the American dollar.

Trade deficit with countries other than the United States narrows for third consecutive month

Imports from countries other than the United States decreased 5.7% in July. There were lower imports from the Netherlands (motor gasoline), Switzerland (non-ferrous metals), the United Kingdom (motor gasoline), and India (various products).

Exports to countries other than the United States were down 4.8% in July. Lower exports to the United Kingdom (gold and crude oil), the Netherlands (pharmaceutical products and iron ore), Australia (pharmaceutical products), Peru (diesel and wheat), and China (coal and copper) were partially offset by higher exports to Hong Kong (gold) and South Korea (crude oil, coal and potash).

The merchandise trade deficit with countries other than the United States narrowed from $8.4 billion in June to $7.8 billion in July, the lowest recorded deficit since January.

Revisions to June merchandise export and import data

Imports in June, originally reported at $64.9 billion in the previous release, were revised to $65.3 billion in the release for the current reference month. Exports in June, originally reported at $69.9 billion in the previous release, were revised to $70.2 billion in the current reference month’s release.

Monthly trade in services

In July, monthly service exports edged down 0.1% to $12.7 billion. Meanwhile, service imports increased 3.7% to $14.4 billion.

When international trade in goods and international trade in services were combined, exports decreased 2.4% to $80.9 billion in July, while imports fell 0.8% to $78.6 billion. As a result, Canada’s trade surplus with the world went from $3.7 billion in June to $2.3 billion in July.

Source: Statistics Canada