OTTAWA: Canada’s trade deficit with the rest of the world narrowed in April as exports rose on higher energy prices, ending a two-month streak of declines.
Canada recorded a trade deficit of 2.94 billion Canadian dollars ($2.24 billion) in April, Statistics Canada said on Friday. Expectations were for a C$2.5 billion trade deficit, according to economists at Royal Bank of Canada.
The previous month’s data were revised to indicate a smaller trade deficit of C$3.18 billion, compared with the earlier estimate of a C$3.41 billion shortfall. Even with the revision, the March deficit remains the widest on record, the data agency said.
The latest result follows dismal trade data in February and March, which cast doubt on whether non-resource exports could drive growth and help offset weakness due to lower commodity prices. Canada’s economy advanced in the first quarter on the strength of net trade, although that was due to a strong January performance.
The wildfires in Alberta, which disrupted crude-oil production, are expected to weigh heavily on trade data for the rest of the second quarter. Most analysts predict the Canadian economy will contract in the April-to-June period.
In April, exports increased 1.5%, marking the first month-over-month gain in sales abroad since January. Exports plunged in February and March, by 6.8% and 4.1%, respectively.
The climb in April exports was heavily tied to a rise in energy prices. Export volumes rose just 0.5%, while prices climbed 1.1%.
The modest rise in export volumes in April suggests weak economic growth for the month, CIBC World Markets said in a note. The trade data “don’t hint at much of a rebound,” the firm said.
Exports of energy products climbed 7.6% to C$5.05 billion, as prices gained 9.7% and volumes dropped 1.9%. The data agency said the sale of natural gas led the gain, in part because of below-average temperatures in the U.S. northeast in April. Exports of crude oil and bitumen increased 3.5%, as higher prices offset lower volumes.
The swift decline in energy prices since mid-2014 has hurt Canadian growth as companies curb capital spending and shed workers.
The energy-price decline has also altered Canada’s overall trade picture. As of the end of the first quarter, energy products accounted for 11% of the value of all Canadian exports, or the lowest share since 2002. In comparison, sales abroad of Canadian-made motor vehicles and parts represent 20% of all exports, or the highest share in more than a decade.
In April, exports of motor vehicles and parts declined 1% to C$7.93 billion, or the third straight month-over-month drop. Overall, non-energy exports still rose 0.8%, due in part to strong demand for Canadian-made industrial machinery and equipment.
On a regional basis, exports to the U.S. rose 2.3% in April but fell 0.6% with the rest of the world. On a year-over-year basis, exports fell 2.3%.
Imports, meanwhile, rose 0.9% in April. On a volume basis, the purchase of goods abroad climbed 0.8%. Imports of aircraft and other transportation equipment rose 52% to a record C$2.22 billion, the data agency said. Offsetting that gain was a 5.1% drop in imports of industrial machinery and equipment.
