Canada’s trade surplus in May reached a four-year high, marking the fourth consecutive month of growth. Statistics Canada reported a surplus of $4.24 billion, up 0.9% from the previous month’s revised figure of $3.41 billion. This positive trend was driven by a 1.5% increase in exports to the United States, Canada’s top trading partner. Analysts had predicted a trade surplus of $2.85 billion.
Despite challenges posed by U.S. tariffs, Canadian businesses are diversifying away from the U.S. market. However, experts caution that unraveling decades-old supply chains with the U.S. could take time.
Exports to the U.S. rose by 1.5% to $53.72 billion in May, accounting for nearly 70% of total exports. On the other hand, imports from the U.S. declined by 1.4%, resulting in a widened trade surplus of $11.6 billion with the U.S. in May.
While exports to non-U.S. countries decreased slightly, imports from these countries increased, leading to a trade deficit of $7.4 billion for Canada in May.
The surge in exports was primarily driven by metal ores and non-metallic minerals, which saw a 16.1% increase. Notably, sulfur exports increased due to disruptions in shipments through the Strait of Hormuz amid conflicts in the Middle East.
Despite a drop in crude oil and gold exports, other sectors such as consumer goods, industrial chemicals, and farm products experienced growth in May. Energy exports decreased by 2% due to lower crude oil volumes exported.
Total imports decreased by 0.2%, with a significant drop in metal and non-metallic categories. Economist Robert Kavcic from BMO noted that while energy exports are still supporting Canada’s trade balance, fluctuations in oil prices can impact trade surpluses. However, the overall outlook suggests that Canada’s economy is rebounding, with trade contributing positively to growth in the second quarter.
