Canada trade deficit jumps in April on record imports

Tue Jun 4, 2013 10:59am EDT
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By David Ljunggren

OTTAWA (Reuters) - Canada's trade deficit leapt in April as imports hit a record high and exports edged down, a further sign that exporters' woes are helping to crimp growth, Statistics Canada data indicated on Tuesday.

The April deficit hit C$567 million ($550 million), slightly more than the C$550 million shortfall analysts had expected. Statscan also revised March's initial C$24 million surplus to a deficit of $3 million.

The revision means Canada has posted 16 consecutive monthly trade deficits as exporters struggle to cope with a strong Canadian dollar and uncertainty in major markets such as the United States and the European Union.

The Bank of Canada repeatedly expresses concern about sluggish exports - a major driver of the economy - and cites that as reason for keeping interest rates at near-record lows.

April's slight drop in exports followed a 2.6 percent advance in March, which Statscan revised sharply downward from an initial 5.1 percent jump. March's relatively strong numbers helped underpin first-quarter growth.

TD Securities chief Canada macro strategist David Tulk noted that net exports were still contributing to first-quarter growth. But conditions were likely to become more challenging, with growth expected to remain below its trend rate until U.S. private sector demand improves, likely in the second half.

The data, along with unimpressive U.S. trade figures, helped pull down the value of the Canadian dollar. It traded at C$1.0323 to the U.S. dollar, or 96.87 U.S. cents, below Monday's finish at C$1.0278, or 97.30 U.S. cents.

Imports rose 1.2 percent in April, the fourth consecutive month-on-month advance, to a record C$40.84 billion. The increase was led by imports of energy products, motor vehicles and parts.   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