Canada trade deficit jumps as weak markets hit exports

Fri Jan 11, 2013 10:51am EST
 
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By David Ljunggren

OTTAWA (Reuters) - Canada's trade deficit jumped unexpectedly in November as imports rose and exports fell, a sign that challenging market conditions are likely to have cut into fourth-quarter economic growth.

Statistics Canada said on Friday that November's deficit was C$1.96 billion ($2.00 billion), up from C$552 million in October.

The deficit, the fourth-largest on record, was much greater than the C$600 million shortfall markets had expected and reflects the continuing problems that exporters face in weak foreign markets and a strong Canadian dollar.

"The trade data was definitely disappointing although this does reiterate a well-known theme that net exports will drag on Canada's economy. We do expect that the picture should brighten somewhat in 2013," said David Tulk, chief Canada macro strategist at TD Securities.

"For the time being this is ... still describing a world of elevated uncertainty and slowing growth momentum," he told Reuters.

Imports rose 2.7 percent on higher shipments of electronic and electrical equipment, in particular cellular phones, as well as motor vehicles and parts. Volumes grew 2.2 percent from October.

Exports dropped 0.9 percent on lower demand for farm, fishing and food products and metal and non-metallic mineral products. Volumes rose 0.4 percent from the previous month.

Benjamin Reitzes of BMO Capital Markets noted that exports were 6.3 percent below year-before levels, the worst performance in three years, while imports were flat.   Continued...