Canadian merchandise trade deficit likely to have widened in August

Canada’s merchandise trade data for the month of August is set to release tomorrow. According to a TD Economics research report, the merchandise trade deficit is likely to have widened to CAD 3.2 billion in August, reflecting a modest rise in imports and little change to export activity.

The latter is expected to be dragged down by some giveback in motor vehicles, which account for 20 percent of total exports and had already returned to pre-COVID levels by July, although employment/hours worked and manufacturing PMI data indicate towards a stronger performance for other export categories.

“Exports are also supported by higher factory prices, suggesting a modest contraction for real exports in line with flash estimates for a pullback in manufacturing”, added TD Economics.