"On a volume basis, the trade report remains a disappointment but the deterioration isn't as dramatic as the headline would suggest."
- Desjardins Capital Markets
Canada's trade balance with the rest of the world deteriorated in August, as a decline in commodity prices fuelled a steep drop in exports. The official report revealed the gap of C$2.53 billion in the reported period, while market consensus bet on C$1.17 billion trade deficit. July's trade data was revised, and now it indicates the trade deficit in the month was C$817 million. The larger gap was mainly caused by a drop in Canadian exports, which declined 3.6% to C$43.95 in August, indicating the largest one-month fall in over three years. In the meantime, imports rose 0.2% to C$46.49 billion, as prices rose 0.3% and volumes fell 0.1%.
Additionally, activity in all sectors of the Canadian economy slowed down in September, the Ivey survey revealed on Tuesday. The PMI indicator, which is calculated by surveying 175 purchasing managers from all sectors of economic activity, declined from August's 58 points to just 53.7 points last month. The indicator came in worse than estimated as analysts suggested that a decline would push the PMI down to only 54.1 points. Canada has been recently suffering from low oil prices, which dragged the pace of economic expansion lower and resulted in the recession during the first two quarters of this year.
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