By Robb M. Stewart
OTTAWA--Canada logged its first trade surplus in eight months in September as exports rebounded and domestic demand showed signs of softening.
The country recorded a small merchandise-trade surplus of 153 million Canadian dollars, the equivalent of about $110.9 million, Statistics Canada said Thursday. That was essentially a balanced trade position, as exports jumped even as imports pulled back.
The shift in the balance from a revised C$6.43 billion deficit in August was considerably stronger that the C$4.5 billion shortfall that economists expected.
The modest surplus was driven by a widening of the longstanding trade surplus Canada carries with the U.S. to the most since February, as shipments to its biggest market by far recovered. Still, exports to the U.S. remain down sharply compared with last year as Canada's economy continues to be squeezed by the Trump administration's shift in trade policy and changeable tariffs.
The value of Canadian goods exports jumped 6.3% in September to C$64.23 billion, the strongest advance in seven months, after shipments the month before fell 3.2%. September also saw imports drop 4.1% from the month before to C$64.08 billion, off setting a 1.0% rise in August.
Release of data, delayed by a U.S. government shutdown that halted the exchange of cross-border trade figures, affirms the positive contribution trade flows played in the stronger-than-expected rebound in economic activity in Canada during the third quarter. And despite expectations economic growth will remain modest near term, the recovery in exports also supports expectations the Bank of Canada is done cutting interest rates.
Statistics Canada said exports in the latest quarter rose 2.4%, buoyed by shipments of energy products and consumer goods, though they were down 3.2% from the same period last year. Imports for the quarter were 2.0% lower, with declines in the movement of industrial machinery and parts, and metals and minerals. That narrowed the country's merchandise-trade deficit for the quarter to roughly C$10.1 billion from C$18.6 billion the quarter before.
The data confirms a broader recovery in Canadian exports following a drop in shipments in April when U.S. tariffs gripped and demand for Canadian goods slumped, Toronto-Dominion Bank economist Marc Ercolao said. "Near-term progress will be far from linear, but it is reasonable to believe that peak negative impacts from tariffs are in the rearview mirror," he said.
For September, exports were higher in nine of the 11 product categories tracked by Statistics Canada, led by shipments of metals and mineral products, with a surge in unwrought gold to countries including Switzerland, the U.S. and the U.K. Still, even stripping out unwrought precious metals and their alloys, Canadian exports were up 4.5% for the month.
Exports of unwrought aluminum and aluminum alloys were up in September, mainly on increased shipments to the U.S., the Netherlands and Italy. Despite that, exports of aluminum were down 16.7% from the same month a year ago, a reflection of the steep tariffs President Trump has imposed on select industries such as aluminum, steel and lumber that are shipped in large volumes from Canada.
Shipments of energy products, Canada's most valuable export, also jumped thanks to a fifth straight month of gains for crude oil.
Imports declined on a drop in shipments of metals and minerals, mainly unwrought gold. Stripping out precious metals, imports were down 1.5%.
Canada's exports to the U.S. rose 4.6% mainly due to shipments of aircraft, light trucks and gold. Imports from Canada's nearest neighbor were down 1.7% to C$37.22 billion. That widened the trade surplus with the U.S. to C$8.61 billion from C$5.97 billion in August.
Exports to countries other than the U.S. rose 11% for September, while imports from these countries fell 7.3%. That narrowed Canada's goods-trade deficit with countries beyond the U.S. to C$8.5 billion, the lowest since last October, from an all-time high of C$12.4 billion in August.
The delayed trade data comes a day after the Bank of Canada held its policy interest rate steady, the start of what economists expect will be a long pause after rates were rolled back across a roughly 16-month period to subdue inflation. The central bank continues to project weak economic growth in the final quarter of the year and a soft 1.1% expansion in 2026, despite gross domestic product expanding 2.6% annualized in the third quarter.
"There's plenty more hurdles still for Canadian trade to pass," said Andrew Grantham, a senior economist at CIBC Capital Markets. He pointed to continued U.S. trade tariffs and the pending renegotiation of the existing North American free-trade pact. "It wouldn't be a surprise if export performance weakened again during the fourth quarter, before seeing a more sustainable recovery later next year."
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
12-11-25 1210ET
