Canadian exports rose 1.8 per cent to $40.6 billion in September, driven almost entirely by rising volumes. Even more exciting was that August growth was revised up from 1.8 per cent to 2.4 per cent, pushing it to the largest monthly increase in almost 2 years. Exports are now up 7.2 per cent compared to September of last year, a healthy gain for 2013.
Energy and Aircraft led the increase…but gains broadly shared
The top performer was the aerospace sector which surged by 20.3 per cent, because of a 39.5 per cent rise in shipments of aircraft. Energy also had a strong month, lifted by natural gas which climbed 17.0 per cent in September alongside a 17.5 per cent gain in refined petroleum products. Agricultural shipments rose 3.5 per cent because of of 11.6 per cent gain from live animals and a 16.2 per cent rise in canola exports. Canada’s machinery and equipment exports disappointed, falling 3.6 per cent, but the sub-sector results were mixed with agricultural machinery rising 9.0 per cent while construction and mining fell 26 per cent. Overall, eight of eleven major export categories recorded growth on the month.
U.S. sales still rising, but exports to Emerging Markets weaken
Canada’s shipments to the U.S. rose 1.0 per cent in September and other OECD climbed 3.2 per cent, while sales to the Europe and Emerging Markets declined by 3.1 per cent and 3.5 per cent respectively. In fact, the U.S. remains Canada’s top performing export market for 2013, up 4.8 per cent, as the U.S. economy gains strength and the effects of fiscal consolidation subside. Next month’s exports to the U.S. will be closely watched to see if there is a big impact from government shutdown and the battle over the debt ceiling. The history of these types of shut-downs and disruptive political events shows that impacts on confidence and GDP tends to be mild, lasting no more than a month or two. Consequently, we expect export growth to resume almost right away, as the U.S. is set for a much stronger 2014.
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