Stronger exports in February helped push Canada’s trade surplus up by more than $2 billion to $4.9 billion, Statistics Canada said today.
February’s surplus was the largest since May of last year, the government agency said.
Canadian companies exported $39.3 billion worth of merchandise in February, up 3.8% from January.
The amount of goods arriving in Canada fell 2% for February to $34.4 billion, the first decrease since October.
Despite the run-up in the Canadian dollar to hover around par with the U.S. dollar, Canada’s trade surplus with the United States soared to $8.1 billion, the biggest surplus in more than one year. Exports to the U.S. rose by 3.6%, while imports retreated 3.4%.
Canada’s trade deficit with countries other than the United States fell to $3.2 billion on higher exports to Japan and the European Union, particularly the Netherlands and Italy.
“The question to ask following the surprising strength in exports is where Canadians are selling their exports, since our biggest trading partner, the United States, is in the midst of a recession,” wrote Jacqui Douglas, economics strategist at TD Securities. “However, exports to the U.S. actually increased by 3.6% in February, pushing the trade balance with the U.S. up to its highest level in over a year. This is simply unsustainable, and is very unlikely to last.
“Going forward,” she added. “We’ll likely see a substantial weakening in exports, particularly in real terms once the effect of higher commodity prices is stripped out.”
Meanwhile, south of the border the U.S. trade deficit rose unexpectedly for a second straight month in February.
A big jump in imports of foreign-made cars offset the first decline in oil imports in a year.
The U.S. Commerce Department said that the trade deficit rose to US$62.3 billion, the highest level since November.
Analysts had forecast that the deficit would decline, believing that the economic slowdown would cut demand for imports.
However, imports of goods and services shot up 3.1% to an all-time high of $213.7 billion.
“Net trade will likely be a plus for the U.S. economy in the first half of the year, but other areas of the economy will be sufficiently weak to cause growth to contract,” said Rishi Sondi, an economist at RBC in a commentary. “To prevent this weakness from evolving into a more prolonged downturn, we expect the Fed to continue to ease rates.”
Canadian trade surplus rises in February
Economist says trade balance with U.S. is "simply unsustainable"
- By: Regan Ray
- April 10, 2008 April 10, 2008
- 08:35