Canada’s trade deficit rose in September to CAD 1.26 billion, driven by declining exports.

Canada's trade deficit in September exceeded market expectations,Stock Index Futures Positions reaching 1.26 billion CAD (about 908 million USD), marking the seventh consecutive month of a trade deficit for the country. According to data from Statistics Canada, the deficit was mainly due to a decrease in exports to major trading partners (excluding the US), especially a significant decline in metal and non-metallic mineral product exports. Although total exports in September increased slightly by 1.4%, export prices fell by 1.5%, leading to a slight overall decline in export value by 0.1%.

The trade data for September was also affected by the digital transformation of the assessment and revenue management by the Canada Border Services Agency, leading to a greater reliance on estimation methods. Analysts had previously expected a deficit of 800 million CAD, while the trade deficit in August was revised upward to 1.47 billion CAD.

Specifically, the largest decline in September was in the export of metal and non-metallic mineral products, dropping by 5.4%, with unprocessed gold shipments falling by 15.4%. On the import side, the total import value in September decreased by 0.4%, primarily due to a 12.7% reduction in imports of metal and non-metallic mineral products, reflecting a slowdown in domestic demand and weak economic growth. High interest rates further exacerbated these challenges. Since June, the Bank of Canada has consecutively reduced rates four times, with the current policy rate at 3.75%. The market anticipates a potential 50 basis point rate cut at the next monetary policy meeting on December 11.

Data shows that in September, Canada's total export value was 63.88 billion CAD, and the import value was 65.14 billion CAD. Despite the overall trade deficit, Canada's trade surplus with the US increased from 7.82 billion CAD in August to 8.29 billion CAD in September. The US is Canada's largest trading partner, with imports from the US accounting for 60% of all imports, a 0.8% increase from the previous month. Meanwhile, the Canadian dollar slightly strengthened against the US dollar to 1.3876, and the yield on Canadian two-year government bonds rose slightly to 3.134%.

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