Shrinking trade deficit another sign of strengthening economy
June 7, 2019
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Rising exports and falling imports helped shrink Canada’s trade deficit in goods in April to $966 million, Statistics Canada said on Thursday, in the latest sign the economy is recovering from a slowdown.
Analysts polled by Reuters had forecast a shortfall of $2.80 billion. Statscan revised March’s deficit sharply down to $2.34 billion from an initial $3.21 billion.
The Bank of Canada held interest rates steady as expected on May 31, saying there was evidence that economic weakness was temporary but signalling it would remain on the sidelines as it monitored developments.
“The good news for the Canadian economy keeps rolling in,” said Royce Mendes of CIBC Economics, predicting second-quarter growth would be greater than expected.
Canada created a record number of jobs in April while March growth rebounded.
The Canadian dollar edged higher, touching $1.3392 against the U.S. dollar, or 74.67 U.S. cents.
April’s trade deficit was the smallest in six months. Exports rose by 1.3 per cent as shipments of metal and non-metallic mineral products jumped by 15 per cent on higher sales of gold to Britain and Hong Kong.
“We think it’s an encouraging start to the second quarter. Exports seem to be getting past what was a rough point earlier in the year,” Stephen Tapp, deputy chief economist at Export Development Canada, said in a phone interview with Reuters.
A major crude exporter, Canada has been hit hard in recent years by lower oil prices and higher U.S. energy output. It has posted just two trade surpluses since October 2014.
Exports of canola fell by $47 million, or 14.7 per cent, as shipments to China stopped amid a diplomatic dispute, and Tapp said he expected shipments would continue to be depressed. Exports of wheat, though, jumped $136 million, or 21.7 per cent.
Total imports fell by 1.4 per cent as deliveries of U.S. airliners plunged by 82.7 per cent in April after a 50.7 per cent drop in March.
Canada sent 74.5 per cent of all its goods exports to the United States in April. Exports to the United States rose by 0.9 per cent while imports grew by 1.9 per cent and as a result, Canada’s bilateral trade surplus fell to $4.20 billion from $4.49 billion in March.
Separately, the U.S. Commerce Department said the U.S. trade deficit unexpectedly narrowed in April as imports of goods dropped to a 15-month low.