Canada shipped 11.1 per cent more to the rest of the world in July than it did in June, and brought in 12.7 per cent more, too.
Statistics Canada said Thursday that cars and car parts flowing across the Canada and U.S. border was the biggest factor in the trade increase.
The data agency said Canada imported $8.1 billion worth of cars and car parts in July, a 50 per cent increase from June's level. The summer months are typically slower for trade in that sector as factory shutdowns in the summer occur. But COVID-19 lockdowns in March, April and May have led to a surge in June and July as car companies catch up to the delayed demand.
Within the import number, vehicles were up by 71.9 per cent, while parts were up by 38.7 per cent.
There was a similar surge on the export side, too, as Canada shipped out $8.2 billion worth of cars and car parts during the month, an increase of 37 per cent. Within that figure, vehicles were up 42.4 per cent while parts rose by 30.7 per cent.
Notably, Canada is now exporting more cars and car parts than it was in February before the pandemic began. The import side is still 11 per cent below its February level.
Trade picked up in other sectors beyond automotive, too. Canada imported 4.8 per cent more consumer goods in the month, which brings that category back above its pre-pandemic level.
Imports of medical equipment fell a little in July, down 6.2 per cent. But the surge in demand for personal protective equipment this year means that Canada still imported 42.8 per cent more in July than it did in February.
And exports of energy products like oil rose by 18.9 per cent, the third strong monthly gain in a row. But the slowdown in oil was so pronounced in March and April that Canada is still shipping out 22 per cent less energy that it was before COVID-19.
The service sector also grew, with exports rising 0.6 per cent in July to $8.7 billion, while imports edged up 0.2 per cent. The service sector is likely being held back by travel restrictions, since it's hard for people to get in and out of the country to perform various services.
"Growth in services trade, as evidenced by today's report, is expected to remain restrained as international travel remains largely restricted and consumers remain wary amid rising COVID-19 cases in some regions," TD Bank economist Omar Abdelrahman said.
Trade deficit widens to $2.5B
All in all, the trade flow added up to a trade deficit of $2.5 billion. In June, the deficit was $1.6 billion.
The entirety of Canada's trade deficit can be chalked up to trade with countries that are not the U.S. Canada has a $5.3 billion deficit with the rest of the world that is offset by a $2.9 billion trade surplus with the U.S.