In the midst of ongoing trade frictions and tariff pressures between the US and Canada, the latest economic data released by Canada has surpassed market expectations. In the second quarter, the current account moved from deficit to surplus, and the third quarter performance of the six major banks exceeded estimates, indicating that certain sectors in Canada still maintain resilience.
During the first quarter of this year, Canada’s current account recorded a deficit of 8.3 billion Canadian dollars. However, in the second quarter, not only did it turn into a surplus but also marked the first surplus since the second quarter of 2022, with the highest amount since the third quarter of 2008.
The current account can be understood as a balance sheet of goods, services, and investment income between Canada and overseas. The surplus this time was mainly driven by the growth in goods exports.
In the second quarter, Canadian goods exports increased by 13.1% to 232.1 billion Canadian dollars, while imports rose by 3.9% to 220 billion Canadian dollars. The trade balance shifted from a 6.4 billion Canadian dollar deficit in the first quarter to a 12.2 billion Canadian dollar surplus, the highest since the third quarter of 2008.
The increase in energy exports was particularly notable, with energy product exports in the second quarter growing by 27.4% to 60.6 billion Canadian dollars, including 44.8 billion Canadian dollars from crude oil and bitumen exports.
Statistics Canada stated that the increase in global production and supply uncertainty due to conflicts in the Middle East led to higher energy prices, boosting Canadian energy exports. Automotive and parts exports also grew by 19.3%, primarily due to increased Canadian automotive production.
Another set of data comes from the Canadian banking industry. The third-quarter performance of these six banks exceeded market expectations.
Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), and Canadian Imperial Bank of Commerce (CIBC) reported adjusted earnings per share of 4.28, 2.77, and 2.73 Canadian dollars, respectively, all exceeding analyst expectations. RBC achieved a record third-quarter net profit of 6.02 billion Canadian dollars.
The capital markets business was a significant source of profit growth for several banks this quarter. RBC’s capital markets business profit increased by 16%, CIBC by 34%, and TD by 87%. Market volatility drove trading activities, and revenue from mergers, acquisitions, and other investment banking activities also grew.
Bank of Montreal (BMO) and Scotiabank also exceeded market expectations. BMO reported adjusted earnings per share of 3.96 Canadian dollars, higher than the expected 3.76 Canadian dollars, while Scotiabank’s earnings per share were 2.28 Canadian dollars, surpassing the 2.10 Canadian dollars forecasted.
National Bank of Canada’s third-quarter performance in the 2026 fiscal year also exceeded market expectations.
These sets of data do not signify that the impact of tariffs on Canadian businesses has disappeared. A considerable portion of the profit growth for banks in the third quarter came from capital markets, trading, and wealth management businesses, which cannot fully reflect the economic conditions of average households and general businesses.
The second-quarter surplus in Canada’s current account was also driven by a significant increase in energy exports. The impact of factors such as rising energy prices due to Iranian conflicts and global supply uncertainty remains to be seen if they can continue. Meanwhile, Canadian businesses directly facing US tariffs are still experiencing pressure from uncertain orders, costs, and trade policies.
The current data indicates noticeable differences in performance across different industries in Canada: the energy and banking sectors show stronger performance, while businesses highly dependent on the US market face greater pressure.