Trade Data Renews Hope
(Export Development Canada – Peter G. Hall)
It’s a precarious world that hangs on every data release for a sign of hope. Such has been the summer of 2011, which has seen economic momentum stall as apocalyptic fears feed financial market volatility. Amid the mayhem, Canada’s international trade data saw a surprising jump in July. Normally, it’s dangerous to get too excited about a single month, but several features of this particular release suggest an unusual increase that may be more than just a flash in the pan.
A fast-forgotten fact about summer data is the temporary factors that held back global growth. A spike in oil prices earlier in the year hit already-weak consumers hard in mid-year. Multiple natural disasters hobbled global output through mid-year, with the earthquake and tsunami in Japan wreaking particular havoc with global supply chains. Canada’s international trade was not exempt, but a surge of more than 20% in trade with Japan during July – both imports and exports – signals a re-boot of stalled supply chains. The effects of other natural disasters are dissipating, and sharply lower oil prices – if sustained – should help beleaguered consumers and give trade flows an additional lift.
Commodities usually feature in large monthly changes in Canadian trade. Not this time. A second key feature of the July data is the outsized contributions of the auto, machinery and equipment and aerospace sectors. These are normally sensitive to swings in global demand and the currency, but each sector surged in spite of sluggish conditions and a stubbornly high Canadian dollar. In contrast, ‘modest’ best describes the contribution of commodities to the July figures. Click here to read more or watch the video.
Date: September 16, 2011