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