Export Development Canada’s annual report, released Wednesday, shows Canadian exports rose 5.7 per cent in 2014 over 2013, with 7,400 companies and investors tying into EDC services. The agency’s customer base increased 3.7 per cent over the same period.
Elsewhere, Canada’s merchandise trade deficit narrowed in February as prices for exported energy recovered from the previous month, Statistics Canada said Thursday. The deficit of $984 million followed a January shortfall that was revised to $1.48 billion from an initial estimate of $2.45 billion. The report was the second this week signalling the effects of the crash in prices for crude oil, Canada’s top export, aren’t as dramatic as policy makers predicted. Statistics Canada two days ago reported the economy shrank 0.1 per cent in January as increased oil production made up for lower prices.
Meanwhile in the US, the trade deficit narrowed to a seasonally adjusted US$35.44 billion in February, the Commerce Department said also Thursday. January’s deficit was revised to US$42.68 billion from an initially reported US$41.75 billion.
Overall, exports decreased 1.6 per cent from January to US$186.25 billion, while imports fell 4.4 per cent to US$221.69 billion. That was the largest drop in imports since the recession ended in 2009.
Back in Canada, EDC signed 1,084 new financing deals last year, worth a record $21.6-billion. Financings were up 17 per cent.
North America Trade
EDC said it “facilitated” $28.9-billion worth of business in emerging markets last year, up 6 per cent from 2013.
“Canadian goods exports are set to finally surpass pre-crisis levels in 2014,” says the report. “In 2015, merchandise exports to the US will slow to 6 per cent as lower prices mask acceleration in output. Sales to Western Europe and emerging markets will come in at 5 per cent and 8 per cent, respectively. Growth in Emerging Europe will be constrained by sanctions limiting trade with Russia.”
The volume of Canadian exports declined 3.3 per cent and import volumes fell 1.7 per cent, according to the latest Statistics Canada data. Volume figures adjust for price changes and can be a better indicator of how trade contributes to economic growth.
“Don’t pay too much heed to the ‘improvement’ in the trade balance,” said Canadian Imperial Bank of Commerce chief economist Avery Shenfeld in a research note, according to Globe and Mail Thursday. “In real terms, trade [in February] was a deepening drag.”
Exports to the United States rose 1.1 per cent in February from January. The surplus with the US widened to $2.95 billion in February from $2.24 billion a month earlier. Exports make up about one-third of Canada’s economy, with about 75 per cent of the shipments going to the US.
“The trade data is a big head fake,” said Jimmy Jean, economist at Desjardins Capital Markets to Wall Street Journal Thursday. “On the surface it looks pretty good but the backbone of this report isn’t pretty.”
As for the US, net exports—the difference between exports and imports—subtracted 1.03 percentage point from the fourth-quarter gain in gross domestic product. GDP, the broadest measure of economic output, expanded at a 2.2 per cent annual pace in the final three months of the year.
The US trade deficit has fallen 3.2 per cent compared to the same period last year. Imports account for roughly 16 per cent of gross domestic product, while exports account for 13 per cent of GDP, according to analysts at Bank of America. The resulting trade deficit — which totalled US$505 billion last year — represents roughly 3 per cent of GDP and causes a drag on overall growth.
The influence of the ports dispute was evident in the trade figures with China. Imported goods from China decreased US$3.5 billion to US$36.3 billion in February, a drop that may prove temporary based on historic patterns.
In a separate report, the US Commerce Department said new orders for manufactured goods increased 0.2 per cent, ending six straight months of declines. Orders excluding transportation rose 0.8 per cent, the biggest rise in eight months. First-quarter growth estimates range between a 0.6 per cent and 1.7 per cent annual pace.