Canada’s trade deficit narrows on oil exports

Canada’s trade deficit narrowed more than economists predicted in June from the previous month’s record, as U.S. demand for crude oil boosted exports.

The C$55 million ($50 million) deficit was narrower than May’s record of C$1.11 billion, a figure first reported last month at C$1.42 billion, Statistics Canada said today in Ottawa. A survey of economists taken by Bloomberg News expected a C$700 million deficit, based on the median of 19 responses.

Exports rose 2.3 percent, the first gain in four months, as crude oil shipments jumped 22 percent and sales of industrial goods such as gold rose 6.1 percent. The price of crude oil, one of Canada’s biggest exports, jumped 41 percent in the second quarter, the most since 1990, based on New York prices.

The recovery from Canada’s first recession since 1992 is still threatened by the pace of a global recovery and a strong currency, central bank governor Mark Carney said last month. Canada’s run of trade surpluses dating back to 1976 ended in December as shipments of oil, lumber and cars to the U.S. plunged.

Excluding energy, exports would have fallen 0.5 percent in June, Statistics Canada said today. Imports fell 1.3 percent, a fourth straight drop, led by a 6 percent decline in machinery and equipment.

The June deficit was the third straight, leaving Canada with the first quarterly shortfall since 1976. The second quarter deficit totaled C$1.85 billion.

Canada’s June trade surplus with the U.S. widened to C$3.10 billion from C$1.71 billion in May.

The Canadian dollar weakened against its U.S. counterpart for the first time in four months in June, making the country’s exported goods more competitive.

In a separate report, the statistics bureau said that new home prices fell 0.2 percent in June from May, the ninth straight decline. From the year-earlier month, home prices fell 3.3 percent. Economists surveyed by Bloomberg expected no change in monthly prices, based on the median of 14 estimates.

Source: Bloomberg