EDC Export Performance Monitor - June 2014

Exports decline in April due to one-off fall in Energy, but Q1 Revised way Up

Canadian exports declined by 1.8% in April  due to a huge 10.7% fall in energy shipments. However, this is no more than a temporary blip , as a number of Canadian refineries were conducting maintenance  in April causing  natural gas exports to fall 34.1% and refined petroleum to decline 39.5%. In fact, if not for the decline in energy, Canada's overall exports would have risen by a healthy 1.5%. April's agriculture exports increased by a healthy 5.4% due to strength in live animals and canola. Forestry exports shot up by 14.6% as the  booming US construction industry got back on track after weather-related delays in the beginning of the year. Industrial machinery rose 1.8% because of big gains in agricultural and metalworking equipment. Finally, Canada's exports of electronic equipment surged 8.9%, the biggest gain in over a decade, as communications equipment rose 21.1%.

Unusually large Revisions push Q1 to a Bonanza

Canadian exports  for March were revised up from a 1.4% decline to a 0.9% gain.  Even more exciting was February revised up from 3.6% growth to a whopping 5.8% gain. This means that in the first quarter of 2014 exports were up 5.4% overall (or nearly 22% annualized), a healthy start to the year.

US Exports Booming; EU Shipments Recovering; Emerging Markets Struggling

Canada's  exports to the US were up 6.1% in Q1, and this despite a miserable quarter where US GDP contracted by 1%. A large part of the gains were in energy  where exports hit $34.6 billion , the strongest quarter on record.  However, agriculture and consumer goods also reached all-time highs of $5.8 billion and $13.9 billion respectively. With healthy growth in April and strong leading indicators, US exports are set for impressive gains in 2014. US trade numbers show surprisingly strong imports due to a robust domestic economy. But the big story is the European Union. After the EU emerged from recession Canada's exports surged to a 9.0% gain in Q4 of 2013 followed by 5.4% gain in Q1 of this year, a remarkably fast turn-around.  Finally, Canada's sales to emerging markets have now declined for 3 quarters in a row and fell a further 1.7% in April as many of these countries contend with depreciated currencies and decelerating GDP growth. However, faster potential growth rates in emerging markets will bring greater export opportunities in the years ahead.

The full report, prepared by Export Development Canada (EDC), is available on the EDC website.