Surprise Canada March trade surplus seen boosting Q1 growth

Thu May 2, 2013 10:37am EDT
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By David Ljunggren

OTTAWA (Reuters) - In a sign the spluttering Canadian economy might grow faster than expected in the first quarter, surging exports helped produce the country's first trade surplus in a year in March.

Statistics Canada said on Thursday that a 5.1 percent jump in exports was behind an unexpected trade surplus of C$24 million ($24 million). Traders had predicted a shortfall of C$720 million after the revised C$1.25 billion deficit in February.

Canada last recorded a trade surplus - a modest C$45 million - in March 2012.

Canada's export sector - a major driver of the economy - has long struggled with a strong Canadian dollar and weak international markets. It is also heavily reliant on the United States, which has been showing signs of recovery.

Other recent figures, including strong February growth figures on Tuesday, also suggest the domestic economy is starting to pick up speed.

Last month, the Bank of Canada predicted first quarter growth of just 1.5 percent on an annualized basis.

"It now looks like trade will add significantly to real GDP growth in the first quarter," said Robert Kavcic of BMO Capital Markets in a note to clients.

"We upgraded our Q1 Canadian growth forecast to 2.3 percent (from 1.5 percent) after Tuesday's real GDP report, and these trade results fully support that change."   Continued...

A wheat train pulls up next to a cargo ship at the Alliance Grain Terminal in Vancouver, British Columbia October 6, 2011. REUTERS/Ben Nelms