By: Jeff Sanford

Economists at CIBC have just released an interesting report on Canada’s trade balance, which plummeted in December to a large $5 billion deficit from a massive $14 billion surplus. This is the worst reading on the national trade balance since 1976.
The take of CIBC economists is that what we’re seeing here is the “uncovering” of the long-term hollowing out of the Canadian manufacturing sector, a trend that high commodity prices had papered over.
When commodity prices were booming, as they were just six months ago, Canada was pulling in all kinds of money on those exports and we racked up all kinds of big trade balance surpluses—even though our manufacturing base, another source of export-generated cash along with commodities—had withered over the last several years. But now that the commodity boom has burst and the water has left the beach so to speak, we see what’s left, a big $5 billion deficit.
Here’s hoping the so-called “creative” service-led economy everyone seems to be talking about comes to be. Of course, a return to economic health and a rise in commodity prices would be the quickest way back to surplus.