Trade Deficit Narrows
CBJ – Canada’s merchandise trade deficit narrowed in February as prices for exported energy recovered from lows set during a crude oil crash last year.
The deficit of $984 million followed a January shortfall that was revised to $1.48 billion from an initial estimate of $2.45 billion, according to Statistics Canada.
Energy exports rose 14.9% to $8.78 billion, including a 45.1% jump for natural gas and a 9.3% rise for crude oil and bitumen. Prices rose 17.5 percent and volumes fell by 2.3%.
The report is the second this week signaling the effects of the crash in prices for crude oil, Canada’s top export, aren’t as dramatic as policy makers predicted. Statistics Canada two days ago reported the economy shrank 0.1% in January as increased oil production made up for lower prices, a report that came just after Bank of Canada Governor Stephen Poloz told the Financial Times that first-quarter growth could be “atrocious.”
Total exports rose 0.4% to $43.5 billion in February, following a 1.7% decline in January. Imports fell 0.7% to $44.5 billion.
The volume of exports declined 3.3% and import volumes fell 1.7%. Volume figures adjust for price changes and can be a better indicator of how trade contributes to economic growth.
The surplus with the U.S. widened to $2.95 billion in February from $2.24 billion a month earlier. Exports make up about one-third of Canada’s economy, with about 75% of the shipments going to the U.S.