Canada’s trade surplus reached a four-year high in May, marking the fourth consecutive month of growth. Data released on Tuesday revealed that exports to the United States hit their highest level since February last year, contributing to Canada’s trade surplus of $4.24 billion in May, a 0.9% increase from the previous month.
The country has now seen three straight months of trade surplus, driven by a 1.5% surge in exports to the U.S., its primary trading partner. Analysts had predicted a trade surplus of $2.85 billion.
Amid challenges from U.S. tariffs affecting key sectors in Canada, businesses are striving to diversify away from the U.S., which traditionally accounted for nearly three quarters of Canada’s exports. However, experts caution that unraveling long-standing supply chains from the U.S. market may take time.
Exports to the U.S. rose by 1.5% to $53.72 billion in May, marking the fourth consecutive monthly increase. Conversely, imports from the U.S. decreased by 1.4%, widening Canada’s trade surplus with the U.S. to $11.6 billion in May. This expansion was attributed to higher energy export prices, according to Statistics Canada.
Exports to countries other than the U.S. experienced a slight decline in May, while imports from non-U.S. nations rose, resulting in a widened trade deficit of $7.4 billion for Canada with non-U.S. countries.
Notably, metal ores and non-metallic minerals saw a 16.1% rise in outbound shipments, primarily driven by increased sulfur exports. Meanwhile, crude oil and gold exports, which had previously bolstered Canada’s trade balance, decreased in May.
Despite the drop in energy exports by 2%, Canada’s trade figures benefited from the ongoing value of energy exports. Total imports decreased by 0.2%, with a significant 18.2% decline in metal and non-metallic imports in May.
Senior economist Robert Kavcic from BMO noted that while energy exports have started to decline, their value is still contributing positively to Canada’s trade performance. Kavcic highlighted that trade surpluses in Canada can fluctuate rapidly with changes in oil prices, emphasizing that the current period may represent a peak in trade surpluses.
Overall, the recent data suggests that Canada’s economy is rebounding, with net exports expected to contribute significantly to growth in the second quarter.