Canada’s trade balance shifted to a surplus in March, buoyed by rising crude oil prices and strong demand for gold, according to recent data. Statistics Canada reported a surplus of $1.78 billion in March, a significant improvement from the $5.11 billion deficit recorded in the previous month. This marked the first surplus in six months for Canada, largely driven by the spike in crude oil prices due to the conflict in Iran, which lifted export values. Despite a decrease in gold prices, global demand for the precious metal helped boost exports.
Analysts had predicted a deficit of $2.88 billion, making the actual surplus a positive surprise. Total exports increased by 8.5%, reaching $72.8 billion, with notable growth in the metal and non-metallic product category, which saw a 24% surge to a record high, and a 15.6% rise in energy exports, reaching the highest level since September 2022. Excluding these categories, Canadian exports experienced a modest 1.1% increase in value but a slight 0.3% decline in volume.
Following a substantial increase in February, exports of motor vehicles and parts rose by 4.5% in March. The higher crude oil prices and enhanced shipments of passenger cars and light trucks contributed to an 8.3% growth in Canada’s exports to the U.S., reaching $48.51 billion in March, the highest level in a year. In contrast, imports from the U.S. decreased by 1.2% to $41.44 billion. This resulted in a trade surplus of $7.1 billion with the U.S., the highest in six months, while Canada’s share of exports to the U.S. dropped to a record low of 66.7%.
Meanwhile, exports to countries other than the U.S. also reached a record high in March, increasing by 9.1%. Import levels from non-U.S. countries decreased by 2.2% during the same period. The Canadian dollar experienced a slight increase of 0.03% to 1.3620 following the release of the trade data. Market expectations suggest that the Bank of Canada may implement two 25 basis point rate cuts by the end of the year.