TD Securities strategists expect Canada’s International Merchandise Trade surplus to narrow in June as weaker Oil prices weigh on energy exports. They forecast a surplus of $2.5bn versus the market’s $3.0bn and May’s $4.2bn. Non-energy exports, particularly autos and manufacturing, should partly offset the energy drag, while stronger imports also contribute to a smaller surplus.
Oil drag to trim surplus
“We look for the international merchandise surplus to fall to $2.5bn in June (market: $3.0bn) from $4.2bn the prior month as exports contract on the large drag from softer crude oil prices.”
“Crude oil prices were down ~15% in June, but the early read from US imports shows a more modest decline, hinting at a rebound in real energy exports after their 4% decline in May.”
“Non-energy exports should provide an offset to the energy drag, reflecting further strength in auto production alongside flash estimates for (non-energy) manufacturing sales to rise another 2.2% in June.”
“Stronger imports should add another driver for the smaller surplus, and the real trade balance should see a smaller decline without the drag from lower commodity prices.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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