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OTTAWA (Reuters) - Canada reported a much smaller than expected trade surplus for February on Thursday as auto exports to the United States fell, puzzling analysts who cited healthy U.S. vehicle sales so far this year.
Statistics Canada said the surplus dropped to just C$292 million ($292 million) from a revised C$1.95 billion in January. The figure was much less than the C$1.90 billion forecast by market operators.
Exports sank by 3.9 percent as shipments of energy products dropped by 6.9 percent, while automotive products fell 11.9 percent after five consecutive monthly increases.
"Autos don't really stack up to what's going on in U.S. sales at the moment so it's a bit of a head scratcher," said Peter Hall, chief economist at Export Development Canada, a federal agency.
"I think what we're talking about is sort of a pause, maybe a pause that refreshes here ... I think the March data are going to come along and erase a lot of the negatives that we see in this month," he told Reuters.
U.S. auto sales rose about 13 percent in March, rounding out the best quarter since 2008. The U.S. and Canadian auto industries are highly integrated.
Douglas Porter, deputy chief economist at BMO Capital Markets, said the lower surplus was disappointing and that the 11.9 percent drop in exports of automotive products was "a bit of a shock".
He said the underlying trend in Canadian trade had still strengthened since last year, when big deficits were reported.
"The big declines in both autos and crude oil exports are unlikely to be sustained — arguably, those are the sectors we would be least concerned about at this stage of the cycle," he said in a note to clients.
The Canadian dollar shrugged off the news and maintained an early trading rise against its U.S. counterpart, pushed up in part by higher oil prices.
At around 9:50 a.m.(1200 GMT), the Canadian dollar was at C$0.9982 versus the U.S. dollar, or $1.0018, up from Wednesday's finish of C$1.0042 versus the U.S. dollar, or 99.58 U.S. cents.
Statscan said exports to the United States, which made up 73.9 percent of all Canadian exports in February, dropped by 3.8 percent. The trade surplus with the United States fell to C$4.81 billion from C$6.06 billion in January.
Imports rose by 0.2 percent on an 18.3 percent surge in the import of energy products, in particular pipeline diluents and aviation fuel. Overall volumes fell by 0.9 percent.
The figures are the last economic data before the Bank of Canada sets interest rates next week.
A Reuters poll released on Wednesday showed that economists do not expect the central bank to raise its key lending rate for at least another year.
The bank's spring survey, released on Monday, said Canadian business had the brightest outlook on sales in two years in the first quarter of 2012.
The Conference Board of Canada said on Thursday that its leading indicator of industry profitability had not shown any signs of growth since last November.
"The lack of significant job creation in recent months, the strong Canadian dollar, and the sideways movement in the stock market are preventing an improvement in the outlook for profitability," it said.
Separately, Statscan said prices of new homes in Canada rose by 0.3 percent in February from January, the 11th consecutive monthly increase.
Reporting by David Ljunggren; Editing by Peter Galloway