Although one might assume that the demand for Canadian exports from U.S. governments (federal, state and local) would be minimal, preliminary evidence suggests that approximately 12 per cent of our non-commodity exports over the 1997 to 2012 period went to the U.S. government sector.
Moreover, a modified version of the Bank’s foreign activity measure, which gives greater recognition to U.S government purchases, seems to improve our ability to capture the weakness in exports over the last two years. However, its explanatory power over the previous three years is not nearly as good.