Ottawa, ON — Canada posted its first trade surplus since last summer in May as the auto sector helped boost exports to a record level and the economy continued to show signs of rebounding.
Statistics Canada said Wednesday a jump in exports helped the economy to a $762-million international merchandise trade surplus in May.
The surplus was the first since the economy eked out a $10-million surplus in July 2018.
Economists had expected a deficit of $1.5 billion for the month, according to Thomson Reuters Eikon.
“May’s international trade data joins a suite of other data releases confirming that the Canadian economy is recovering from the soft patch seen in late 2018 and early 2019,” TD Bank economist Omar Abdelrahman wrote in a report.
Abdelrahman said there was little to complain about in the trade report, though part of the surge should be discounted given the one-off transactions including the resumption of motor vehicle production following shutdowns and spikes in the volatile aircraft and boats and other transportation equipment categories.
“Still, a solid report is a solid report, with today’s data revealing an encouragingly broad-based May export picture,” he said.
The Canadian economy hit a weak patch late last year as oil prices plunged and the country posted its weakest back-to-back quarters of growth since 2015 at the end of 2018 and the start of this year.
However, recent data has suggested the weakness was temporary and the economy has been growing in strength.
The Bank of Canada, which is expected to make its next interest rate announcement next week and release its updated monetary policy report, has been expecting the pick up in growth.
The Canadian central bank’s position stands in contrast to that of the U.S. Federal Reserve which has suggested it is prepared to cut interest rates later this year.
Benjamin Reitzes, Canadian rates and macro strategist at BMO Capital Markets, said the Canadian economic data continues to outperform despite the increasingly dour global backdrop.
“There’s still plenty of data to go for Q2, but it looks as though the economy is rebounding strongly from the near-zero growth in Q4 and Q1,” Reitzes said.
“The question now is whether this strength persistent into June and Q3 when the global backdrop was much more challenging.”
Statistics Canada said the trade surplus came as exports rose 4.6 per cent to a record $53.1 billion in May.
Motor vehicle and parts exports were up 12.4 per cent for the month as exports of passenger cars and light trucks jumped 17.8 per cent.
Exports of aircraft and other transportation equipment and parts soared 33.0 per cent.
Meanwhile, total imports rose 1.0 per cent to $52.3 billion in May.
Imports of aircraft and other transportation equipment and parts rose 14.2 per cent, while imports of motor vehicles and parts increased 1.6 per cent in May.
In volume terms, exports increased 4.0 per cent and imports were up 1.2 per cent.