Canada slips into trade deficit in April as exports slide

Wed Jun 4, 2014 10:10am EDT
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By Louise Egan

OTTAWA, (Reuters) - Canada unexpectedly slipped back into a trade deficit in April after two months of surplus, as imports jumped to a record-high and exports fell, a worrying sign for economic growth in the second quarter.

However, the details in the trade balance report, released by Statistics Canada on Wednesday, suggested the weakness in exports could be short-lived as a 10.7 percent drop in energy exports was partly due to refinery shutdowns for maintenance.

The trade gap of C$638 million ($585 million) followed a revised March surplus of C$766 million, disappointing market forecasts for a C$200 million trade surplus in April.

Exports slid 1.8 percent to C$42.83 billion, dragged down by natural gas, refined petroleum products and precious metals.

Shipments destined for the United States, by far Canada's biggest market, dropped just 0.2 percent while those to the European Union tumbled 22.8 percent.

Overall export prices fell 1 percent in the month and volumes dropped by 0.8 percent.

Imports, on the other hand, shot up 1.4 percent to C$43.46 billion, beating the previous record high set in March and led by consumer goods.

Mazen Issa, economist at TD Securities, said the deterioration of the trade picture was linked to one-off events - maintenance work in the oil sector and a big drop in precious metals shipments to the European Union.   Continued...