Canada's November Trade Surplus Narrows As Precious Metals Lead To Export Decline

• Canada's trade surplus decreased to CAD 1.57Bn in November from the previous month, falling below analysts' expectations of CAD 2Bn. October's surplus was revised upward to CAD 3.2Bn.
• Exports experienced a 0.6% decline, marking the first decrease in five months. The drop was attributed to lower exports of precious metals like gold, silver, and platinum group metals, as well as aircraft and transportation equipment. Bergman said the decline in precious metals was likely due to a decrease in bank demand in Europe due to unrest in the Middle East.
• Imports, on the other hand, were up 1.9%, driven by energy products and industrial machinery, with increased imports of nuclear fuel and other energy products. Under the energy segment, imports of nuclear fuel and other energy products increased the most, mainly on higher imports of uranium from Kazakhstan. Imports of refined petroleum energy products also increased due to higher imports of motor gasoline and aviation fuel from the United States, coinciding with outages reported in Canadian refineries in autumn.
• Despite flat economic growth in October, the Bank of Canada noted easing labour market pressures. The central bank expects a slowdown in 2024 but considers it a sign that its monetary policy is effective. The next rate announcement is on Jan. 24, with expectations to maintain the key policy rate at 5%.
• Factors influencing the trade balance include a potential return to deficit due to normalizing auto imports after U.S. strike impacts. Further, global high interest rates may limit demand for Canadian exports.

(Source: Reuters)