Canada Records $3.9 Billion Trade Surplus in June

Canada’s trade surplus widened to $3.9 billion in June, the largest reading in four years, as a softer Canadian dollar lifted the dollar value of cross‑border shipments.

Surplus driven by currency, not just trade flows

Statistics Canada said the surplus rose from a revised $3.7 billion in May, marking the fourth consecutive month the country posted a positive balance. Economists surveyed by the outlet had forecast a narrower gap near $3 billion, making the actual figure notably higher.

The agency also trimmed May’s original estimate of $4.24 billion sharply, reflecting the impact of the loonie’s movement. The average value of the Canadian dollar fell 1.7 U.S. cents against the greenback, the steepest monthly decline since October 2022. Because most trade invoices are settled in U.S. dollars and later converted, a weaker loonie automatically inflates reported values in Canadian terms.

“All other things being equal, when the Canadian dollar depreciates against the U.S. dollar, monthly trade values expressed in Canadian dollars are higher,” the agency explained. That mechanical effect runs through the headline numbers.

Exports and imports in real terms

When expressed in Canadian dollars, exports rose 0.4 percent and imports edged up 0.2 percent in June. In contrast, the same data in U.S. dollars showed exports falling 2.0 percent and imports dropping 2.1 percent.

Stripping out price effects, export volumes increased 1.1 percent while import volumes slipped 1.5 percent, indicating underlying momentum in shipments despite the mixed price picture.

Gold accounted for much of the export gain. Metal and non‑metallic mineral product shipments jumped 16.5 percent, led by a 27.9 percent surge in unwrought gold and related metals as shipments to the United Kingdom rose and foreign buyers increased purchases of Canadian‑held gold.

Energy exports moved the opposite direction, falling 10.0 percent as crude oil prices eased.

On the import side, a 59.0 percent rise in computers and computer peripherals—largely processing units for data centres sourced from the United States—pushed total imports to a record $73.6 billion. Excluding electronic and electrical equipment, imports would have declined 1.3 percent.

Canada’s trade remains heavily tied to the United States, with 69.5 percent of exports heading south in June. Exports to the U.S. rose 0.3 percent while imports from the neighbor climbed 3.0 percent, narrowing the bilateral surplus to $9.98 billion from $11.12 billion in May.

Quarterly figures show exports grew 13.1 percent—the strongest increase since Q3 2020—while imports advanced 4.2 percent.

The Bank of Canada kept its policy rate at 2.25 percent on July 15 for the sixth straight meeting and noted that export growth has resumed and is likely to keep strengthening, albeit on a slower trajectory. The central bank estimated second‑quarter GDP growth at about 2.5 percent.

TD Economics economist Marc Ercolao said the June data should reinforce expectations of a GDP recovery, but cautioned that “signals in trade remain noisy given the still‑outsized swings in energy, autos, gold and computer equipment‑related flows.”

In a brief analysis, the current surplus mirrors past episodes when a weaker currency boosted nominal trade balances without necessarily reflecting stronger real‑volume growth.

Prince Owusu, senior economist at Export Development Canada, expressed optimism about the second half of the year, citing potential gains in gold and auto shipments. “Overall, I think that we should do quite well for the second half of the year,” he told journalists on the phone.

The trade rebound aligns with the Bank of Canada’s view that the loonie’s slide was partly linked to rising U.S. bond yields while Canadian yields remained relatively unchanged.

Real‑volume trends will remain a focal point for policymakers and market participants.