Trans Mountain pipeline helps fuel Canada's surprise trade surplus in June
Canada unexpectedly recorded a $638 million trade surplus in June as an expanded crude oil pipeline and surging global demand for gold drove exports higher.
Economists in a Bloomberg survey had expected the country to record a trade deficit for the fourth month in a row, with a median estimate of $2.04 billion. Statistics Canada noted in Tuesday’s release the size of the surplus was “close to the typical bounds of monthly revisions,” having revised the previous month’s trade balance upward by about $320 million.
Exports rose 5.5 per cent overall in June, outpacing a 1.9 per cent rise in imports.
The report was released at the same time as U.S. data that showed the country’s trade deficit narrowed in June for the first time in three months. Canadian government two-year bond yields rose about three basis points on the day to 3.213 per cent, while the loonie fell about 0.1 per cent to $1.384 per U.S. dollar as of 8:45 a.m. in Ottawa.
The rise in exports captures the impact of the Trans Mountain pipeline’s expansion, which began commercial operations in May. Prime Minister Justin Trudeau’s government spent billions to complete the near-tripling in capacity of a line that runs from Alberta’s oilsands to a Vancouver-area port.
Exports of energy products were up 11.7 per cent in June, led by higher exports of crude oil. While crude oil prices rose in June, volumes were the largest contributor to the increase, driven largely by higher shipments to Asian countries.
“Despite robust export activity in June, trade will likely act as a headwind to second-quarter gross domestic product growth, as April and May data came in on the weaker end,” Marc Ercolao, an economist at Toronto-Dominion Bank, said in a report to investors.
“That
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