Canada Trade Deficit Almost Triples

The gap between what Canada sells to the world and what it buys, stretched to $3.6 billion in June, as exports fell back from recent highs, while imports increased.

Following three consecutive monthly record highs, total exports fell 4.3% to $46.5 billion in June, Statistics Canada reported Friday. Imports, meanwhile, edged up 0.3% to $50.1 billion, Reuters reported.

Much of what Canada exports goes to the United States, and the country has a trade surplus with its southern neighbor. Canada’s trade surplus with the United States narrowed to $2.2 billion in June from $3.5 billion in May, the smallest surplus since June 2016.

“Looking ahead, the recent appreciation in the Canadian dollar has weakened Canada’s competitive position slightly,” TD Bank economist Leslie Preston said. “But, healthy US demand should continue to be supportive of exports.”

The trade deficit with the rest of the world, however, widened from $4.9 billion in May to $5.8 billion in June.

Meanwhile, the economy added nearly 11,000 jobs in July, the eighth consecutive month of growth, as the unemployment rate fell to its lowest point in nearly nine years, Statistics Canada said Friday.

The pace of job growth slowed, however, with 10,900 net new positions, down from an increase of 45,300 in June. The number of full-time jobs grew by 35,100, offset by the loss of 24,300 part-time jobs.

The unemployment rate declined by 0.2 percentage points to 6.3%, its lowest level since October 2008 as the number of people looking for work dropped.

“After a run of huge gains, nobody is going to complain about the more moderate hiring pace that Canada saw in July, and the attention instead will focus on yet another drop in the jobless rate,” Avery Shenfeld, chief economist of CIBC Capital Markets, said in a note to clients.

“The two tick drop to 6.3% in that measure was mostly a story of weaker labor force participation, although the 11K increase in employment was buttressed by a hefty 35K gain in full-time jobs.”

Wholesale and retail trade sector gained 22,000 jobs, information, culture and recreation added 18,000 and manufacturing saw an increase of 14,000. Jobs in educational services dropped 32,000, mainly in Ontario and Alberta.

Regionally, employment in Ontario and Manitoba rose by 26,000 and 4,800, respectively. Alberta lost 14,000 jobs, Newfoundland and Labrador shed 5,300 positions and Prince Edward Island dropped by 1,000.