Oil-price rout doubles Canada’s trade deficit to $2.1B in November

Canada's trade deficit more than doubled in November compared to October, following a steep decline in crude oil prices. THE CANADIAN PRESS/Jason Franson

Canada’s trade deficit more than doubled in November, widening to $2.1 billion from a revised estimate of $900 million in October, Statistics Canada said on Tuesday.

The increasing spread between imports and exports was driven by a 14 per cent drop in crude oil prices. Lower export volumes compounded the price effect, resulting in a decline of nearly 18 per cent in crude oil exports for the month.

READ MORE: Record amount of Canadian oil exported by rail raises safety concerns

The bigger trade deficit was “fully expected given what happened with oil prices in the month,” BMO senior economist Robert Kavcic wrote in a note shortly after the release of the data.

WATCH: Assessing the impact of Alberta’s move to cut oil production

Click to play video 'Assessing the impact of Alberta’s move to cut oil production' Assessing the impact of Alberta’s move to cut oil production
Assessing the impact of Alberta’s move to cut oil production – Dec 3, 2018

But the bad news for Canada’s trade sector extends beyond the energy industry.

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Overall, exports were down 2.9 per cent, with volumes falling by 1.8 per cent and prices dipping 1.1 per cent. Despite an upward revision to the October trade deficit (now estimated at $850 million from a previously reported $1.2 billion), November was the fourth consecutive month of declines, with exports down in eight of 11 sectors tracked by StatsCan.

Imports also slipped, although less than exports, falling by 0.5 per cent.

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“Oil production curtailments in Alberta, the GM plant shutdown, and slower real wage growth are indications that Canadian economic activity slowed at the end of 2018,” wrote TD senior economist Fotios Raptis.

Moreover, he added, the oil production cuts mandated by the Alberta government starting in 2019, coupled with slower export demand from foreign countries, “are likely to continue to weigh on Canadian exports and economic growth in the months ahead.”