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OTTAWA (Reuters) - Canada's trade deficit unexpectedly shrank to C$984 million ($781 million) in February from C$1.48 billion in January as energy exporters benefited from stabilizing oil prices, Statistics Canada data showed on Thursday.
The deficit was much smaller than the C$2.00 billion shortfall analysts had expected. Statscan also revised January's deficit down sharply from an initial C$2.45 billion, citing updated figures for energy exports.
Crude prices roughly halved between June and January, cutting revenues for Canada and other major oil-producing nations. Prices began to recover in February, helping drive up the overall value of the country's exports by 0.4 percent.
But in a sign of the continuing challenges that face the sluggish economy, overall export volumes dropped by 3.3 percent and import volumes fell by 1.7 percent.
Exports in the large automotive sector were down 15.1 percent, a likely concern for the Bank of Canada, which has long stressed the importance of non-energy exports if the economy is to hit full capacity.
"The only good news here was the revision to January’s results," said Avery Shenfeld of CIBC World Market economics.
Exports of energy products jumped by 14.9 percent, reversing eight straight months of declines, on a 17.5 percent increase in prices. The month-on-month increase in energy prices was the largest since an 18.1 percent advance in December 2000.
Export Development Canada chief economist Peter Hall described the February report as "a real mixed bag" and said he suspected the sharp drop in auto exports was related to frigid weather during the month.
"Demand is still very healthy in the United States, so that's not the issue ... I don't think there's anything sustainable inside of the 15.1 percent drop," he told Reuters.
The overall value of imports fell by 0.7 percent as seven of 11 subsectors tracked by Statscan declined. Imports of motor vehicles and parts dropped by 4.7 percent, while imports of industrial machinery, equipment and parts fell by 4.3 percent after hitting a record high in January.
Exports to the United States, which accounted for 75.3 percent of Canada's global total in February, rose by 1.1 percent, while imports fell by 1.2 percent. As a result, the trade surplus with the United States rose to C$2.95 billion from C$2.24 billion in January.
Reporting by David Ljunggren; Editing by Lisa Von Ahn and Peter Galloway