A shipping container is unloaded at the Port of Montreal, on May 17, 2021.CHRISTINNE MUSCHI/Reuters
Canada posted a smaller-than-expected merchandise trade deficit of $1.05-billion in April, as energy and gold helped exports grow faster than imports, data showed on Thursday.
Analysts polled by Reuters had forecast a $1.40-billion deficit in the month. The March deficit was downwardly revised to $1.99-billion from $2.28-billion reported initially.
Total exports rose 2.6 per cent in April, while imports increased by 1.1 per cent, Statistics Canada said. By volume, exports grew 1.7 per cent and imports declined by 0.2 per cent.
The rise in exports was led by energy products and unwrought gold.
The energy category benefited from higher natural gas, crude oil and natural gas liquids exports, helping offset a decline in exports of refined petroleum products and nuclear fuel, Statscan said. The increase in unwrought gold exports was primarily attributable to higher prices.
The Canadian dollar was little changed after the numbers were released with the loonie trading 0.04 per cent weaker at 1.3697 to the U.S. dollar, or 73 U.S. cents.
Exports to the United States, which is Canada’s biggest trading partner and accounts for over three quarters of exports, grew 2.4 per cent, helping to widen its trade surplus to its neighbor south of the border.
“We are seeing ... softening demand in the United States which is certainly not an ideal backdrop for Canadian exporters to sell into,” said Stuart Bergman, chief economist at Export Development Canada.
Canada’s economic growth is expected to have resumed in April after stalling in March, helped by mining, quarrying, and oil and gas extraction, Statscan said in preliminary GDP forecast released last week.
On Wednesday, the Bank of Canada lowered its key policy rate for the first time in four years and said further cuts were possible if inflation – last measured at 2.7 per cent – continues to edge towards the bank’s 2 per cent target.
Further cut in rates by the BoC will make it diverge from the U.S. Federal Reserve more which could weaken the currency and could be good for exports, Bergman said.
Import growth in April was led by cars, ships and unwrought gold.
Motor vehicles and parts imports rose for the third consecutive month, helped by imports of sport utility vehicles and other light trucks from the United States.
Inbound delivery of ships, including a ferry from China that will run between Newfoundland and Nova Scotia, also aided import numbers, Statscan said.
Overall, 8 of the 11 export product categories rose in April, while 6 of the 11 import product recorded growth.