Canada's Latest Exports Data Shows Improvement

As a resource-rich country, Canada is heavily dependent on exports. Canada exports the majority of its natural resources and finished products to the US, its major trading partner. In order to analyze the latest export figures, I reviewed the “Export Instant Insight” report published by Export Development Canada (EDC).

The following are some of the key points in the April 2009 report:

• Canada’s merchandise trade balance stood at 5.2% in February of this year after falling for 6 consecutive months
• The machinery and light equipment category was the top performing sector
• The auto sector came in second with growth of 20% after production resumed in many plants
• Too early to conclude that Canadian exports have seen the bottom in this recession
• The forestry products sector showed a growth of just 4.4% over the previous month indicating that the US housing market is still in the doldrums
• Despite this growth, export volume is still 20% lower than last year's levels

Chart #1: Exports

click to expand

Chart #2: Export Growth Major Sector Comparison

Source: EDC

A simple and easy way to invest in Canada is via an ETF such as the ishares MSCI Canada Index Fund (EWC). As of the end of April the fund is up 9.66%. With $1.2B in assets, the ETF offers a yield of 1.84%. Not surprisingly energy and materials comprise the largest sectors in its portfolio. Financials are next with about 30%.