Export boom driving Canada’s largest trade surplus since 2014

Bloomberg

Canada’s trade sector unexpectedly recorded its largest surplus in more than six years on across-the-board increases in exports.
The nation ran a surplus of C$1.4 billion ($1.1 billion) in January from a revised deficit of C$1.98 billion in December, Statistics Canada said in Ottawa. Economists were predicting a gap of C$1.4 billion. It marked the first time Canada has run a monthly trade surplus since May 2019, and represents the largest since 2014.
“The surprise trade surplus is a welcome development in what was expected to be a very challenging time for the economy,” Benjamin Reitzes, rates and macro strategist at the Bank of Montreal, said in a report to investors. “This is just another sign that the economy weathered the second wave
impressively well.”
Exports rise 8.1% in January, versus a 0.9% increase in imports. Shipments of energy products were up 5.9% on rising oil prices. Non-energy exports increased 8.5%.
Canada’s trade deficit was running at historically elevated levels for much of last year, but the picture has changed sharply in the recent months amid
improving trade flows globally.
Merchandise trade with the US was big driver behind the gain. Shipments south of the border rise 11.3% to highest value since September 2019. Aircraft and other transportation equipment rise 72.3% on the month. That was due to a Canadian airline retiring a large number of planes from its fleet and shipping them to the US, the agency said. Excluding that one-time gain, trade would be roughly balanced.
Monthly service exports were up 0.5% to $9.3 billion, versus a 2.7% increase in imports,
Statistics Canada said.
“Expect some deterioration in the trade balance next month as Canada doesn’t have an unlimited stock of used planes,” Reitzes said. Still, “the underlying figures ex-airplanes sitting around balance, with commodity prices rising further since January, is certainly encouraging,”