Canada’s exports increased at their fastest pace in more than a year, Statistics Canada said today, as the Canadian economy continues to beat economists’ expectations.

According to the federal agency, Canadian companies crawled back from 2007’s downward trend, exporting $38 billion worth of merchandise in January, up 3.6% from December.

Overall, exports rebounded to $3.3 billion in the first month of this year, from a nearly 10-year low of $2.3 billion in December. Economists were expecting a much more modest rise of $2.6 billion, and overall are encouraged, but cautious of the surprise improvements.

“Trade is still likely to be a major source of weakness for Canadian growth this year with the risks largely skewed to the downside in the face of weakening US growth and a high Canadian dollar,” wrote RBC assistant chief economist Paul Ferley, in a morning note.

Strong resource exports led the increase, as energy products went up 11.9%. As well, industrial goods and materials exports rose 10.7%. But the manufacturing sector continued its struggle, with automotive products falling 9.9%. The surplus was pushed up by a 4.2% rise in export prices, but actual volumes of goods sent to other countries slid 0.6% for the month.

On the incoming side, merchandise imports rose 1% to $34.7 billion, the country’s third increase in a row. Import prices increased 1.7%, while volumes slipped 0.7%.

Exports to the United States grew more sharply than imports, pushing the trade surplus with the United States to $6.2 billion, recovering some of its December decline.

But the trade activity is not as strong as the numbers might suggest, according to TD Securities economics strategist Jacqui Douglas. “The increase in both of exports and imports was largely due to price effects, particularly for exports, since on a real basis exports gained only 0.3% and real imports were down 0.4%,” she wrote in a note to clients. “Despite today’s improvement, the Canadian trade balance is still not in the clear, and we could still see a further deterioration going forward.”

U.S. trade gap grows

The U.S. trade deficit widened in January as the price for oil set a new record, but the shortfall was smaller than expected, with exports making their largest climb in six months.

The U.S. deficit in international trade of goods and services increased by 0.6% to US$58.20 billion from December;s revised US$57.86 billion, the Commerce Department said today.

The January deficit was short of Wall Street expectations. Economists had estimated a US$59.75 billion shortfall.

U.S. exports in January climbed 1.6% to US$148.23 billion from US$145.86 billion, spurred by a weak dollar and solid growth of major trading partners.

Imports also increased, despite the U.S. economy’s sharp slowdown. Purchases of foreign goods and services rose by 1.3% to US$206.43 billion from US$203.72 billion.