Exports grew more than imports did in January, narrowing trade deficit to $4.2B

The gap between what Canada sells to the rest of the world and what it buys from it got narrower in January, down from the all-time record deficit it hit at the end of 2018.

Statistics Canada reported Wednesday that Canada's international trade deficit narrowed to $4.2 billion in January, mainly because of higher Canadian oil exports. The data agency originally reported that Canada's trade deficit hit an all time record of $4.6 billion in December, and on Wednesday Statscan revised that figure even higher — it was actually $4.8 billion, based on the new data.

But the figure seems to have come down since then.

Canada imported 1.5 per cent more during the month of January, but exports grew by almost twice that much, which is why the overall gap got smaller.

After five straight monthly declines, Canadian energy exports rose by 14 per cent during the month to $7.1 billion. A lot of that was oil, as prices rebounded by more than a third from a big decline seen at the end of 2018.

While Canada has a trade deficit with the world as a whole, the country continues to have a trade surplus with its largest trading partner, the United States. Exports rose to just over $34 billion while imports increased to $32.5 billion, giving Canada a $1.6 billion trade surplus to the U.S.

With the rest of the world, meanwhile, Canada posted a trade deficit of $5.8 billion, down from $6.6 billion in December.

In January, Canada sold:

• 52 per cent more to the UK.
• 37 per cent more to Italy.
• 28 per cent more to the Netherlands.
• 17 per cent more to Mexico.
• 17 per cent less to China.
• 18 per cent less to South Korea.

Despite the yawning trade deficit overall, TD Bank economist Omar Abdelrahman was heartened by some of the details of the report.

"The rebound in exports (the first since July), and specifically in energy prices, which weighed heavily on trade in the last few months, is encouraging," he said after the numbers came out.

He thinks a weak loonie should help boost Canadian exports even further in the coming months, but a worsening outlook for the global economy could hold that back a little. "This wasn't a great start to 2019, but it could have been worse," he said.