The December gap fell to C$370 million ($279 million), down from a revised deficit of C$1.2 billion in November, Statistics Canada reported in Ottawa. Economists had forecast a deficit of C$610 million. It was largely an energy story, with shipments of crude up 18% during the month.

It’s the best trade reading since the country recorded a small surplus in May. Canada has averaged monthly trade deficits of C$1.8 billion over the past three years.

Key Insights

• Canada’s struggling export sector had been one of the main reasons for the nation’s economic slowdown at the end of last year, so the December recovery in shipments could ease worries that the downturn will persist
• Total exports jumped 1.9% in December, though excluding energy gains were just 0.3%. The pick-up during the month erases a 1.9% decline in November, which had been hampered by a multi- day strike at CN Rail and the rupture of the keystone pipeline in North Dakota
• Even with the rebound in exports in the final month of 2019, which included a 2.8% jump in volumes, the trade sector looks to have been a major drag on growth in the fourth quarter. In volume terms, exports were down 2% in the fourth quarter, surpassing the 0.6% drop in imports

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• The increase in volumes in December was the first in five months
• For all of 2019, Canada recorded a deficit of C$18.3 billion, the smallest annual gap since 2014. That largely reflected sluggish imports, which were up 1% for the year. Exports rose 1.7% last year, well below 2018 gains of 6.3%
• Imports recorded another sluggish month of growth in December, rising just 0.2%.
• The rise in oil exports widened the nation’s trade surplus with the U.S. to C$5.2 billion in December, from C$4.1 billion a month earlier.