Thursday, May 5, 2016

Canada's Exports Decline 4.8% in March, Not Good For Canada and Ontario GDP

Canada and Ontario having great economic performance in the first quarter, while the US only had GDP growth of 0.5%, seemed somewhat strange. Certainly the low dollar would have contributed, but the dollar started coming back from its nadir early in 2016.

Now Statscan has the March trade numbers out and they aren't good. Canada's exports declined by 4.8% in March, while imports decreased by 2.2%. The fact exports declined more is going to hurt Canada and Ontario's GDP for March and doesn't look good for the second quarter.

From the report:

"In March, total exports fell 4.8% to $41.0 billion, the lowest value since January 2014. Exports decreased in 10 of 11 sections, led by motor vehicles and parts, consumer goods, and metal and non-metallic mineral products. Exports excluding energy products also declined 4.8%. Year over year, total exports were down 5.1%."

"Exports of motor vehicles and parts decreased 6.0% to $8.1 billion, the second consecutive monthly decline. Passenger cars and light trucks fell 6.6% to $5.6 billion in March. Exports of motor vehicle engines and motor vehicle parts declined 4.8% to $1.9 billion. For the section as a whole, prices were down 3.3% and volumes fell 2.7%."

That's not good for Ontario's GDP at all, considering that motor vehicles and parts manufacturing is almost all in Ontario. The fact that Ontario could have a decent first quarter GDP number means that the province is even more dependent on real estate to contribute to GDP.

The Atlanta Fed's GDPNow prediction for US second quarter GDP in 1.7% isn't great either, although better than 0.5%.

With gasoline prices creeping up again in Ontario, that isn't great either for the province. Both first and second quarter GDP numbers should be interesting.

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