Canada experienced a shift to a trade surplus in March driven by increased exports due to higher crude oil prices and strong demand for gold. The country reported a surplus of $1.78 billion for the month, a significant improvement from the previous month’s deficit of $5.11 billion.
This marked the first surplus in six months for Canada, with the rise in crude oil prices influenced by the conflict in Iran contributing to higher export values. Despite a decrease in gold prices, global demand for the precious metal supported export growth.
Analysts had anticipated a deficit of $2.88 billion, but total exports surged by 8.5% to $72.8 billion in March. Key contributors to this increase were a 24% rise in metal and non-metallic product exports, reaching a record high, and a 15.6% increase in energy exports, hitting their highest level since September 2022.
Excluding these categories, Canada’s exports saw a moderate 1.1% rise in value but a slight 0.3% decline in volume. Following a substantial increase of 24.9% in February, exports of motor vehicles and parts continued to grow, rising by 4.5% in March.
While exports to the U.S. increased by 8.3% to $48.51 billion, driven by higher oil prices and shipments of vehicles, imports from the U.S. decreased by 1.2% to $41.44 billion. The trade surplus with the U.S. reached $7.1 billion, its highest in six months, while the share of exports to the U.S. dropped to a historic low of 66.7%.
Exports to countries other than the U.S. also hit a new record high in March, with a 9.1% increase, while imports from non-U.S. countries decreased by 2.2%. Following the trade data release, the Canadian dollar saw a slight increase to 1.3620, with money markets predicting two 25 basis point rate cuts by the Bank of Canada by the year’s end.