Canada trade deficit bigger than forecast as cheap oil bites
By David Ljunggren
OTTAWA (Reuters) - The retreat of oil prices helped push Canada's trade deficit to near a two-year high in November, signaling the challenges that cheaper crude pose for the petroleum-exporting nation.
Statistics Canada reported on Wednesday that the November deficit jumped to C$644 million ($546 million) from a deficit of C$327 million in October, much higher than the C$300 million shortfall forecast by analysts.
Exports dropped by 3.5 percent, in part due to a 7.8 percent fall in the value of energy shipments. Benchmark prices for crude have halved over the past six months.
"The trade deficit is likely to worsen materially due to the steep drop in energy prices, suggesting it will be some time before we see another surplus," BMO Capital Markets economist Benjamin Reitzes said in a note to clients.
Energy was not the only underperformer since nine of 11 export sectors tracked by Statscan recorded declines. Overall prices fell 1.9 percent, while volumes were down 1.6 percent.
The value of imports shrank by 2.7 percent on broad-based weakness.
The Bank of Canada - which says it will not raise its key interest rate from a near-record low of 1.0 percent until the economy shows signs of durable strength - has long fretted over the struggling export sector.
The bank is due to release updated economic forecasts on Jan. 21 and TD Securities strategist Mazen Issa predicted the trade figures would help ensure Governor Stephen Poloz maintains a cautious tone. Continued...