UPDATE 2-Canada July trade surplus jumps to near six-year high

Thu Sep 4, 2014 10:19am EDT
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(Adds analyst reaction, Canadian dollar strengthening)

By David Ljunggren

OTTAWA, Sept 4 (Reuters) - Canada's trade surplus in July jumped to a near six-year high of C$2.58 billion ($2.37 billion) in another sign the long-battered export sector could be on its way to a lasting recovery.

Market analysts had expected a surplus of C$1.20 billion. Statistics Canada, which released the data on Thursday, revised June's surplus down to C$1.83 billion from an initial C$1.86 billion.

The July surplus was the largest since the C$2.61 billion recorded in October 2008 and marked the first time since November 2008 that Canada has posted three consecutive monthly positive trade balances.

Exports of goods and services account for around 30 percent of Canada's gross domestic product and are a major driver of the economy.

Canada's exporters struggled since the 2008 recession to cope with weak markets, increasing competition and a stronger Canadian dollar. Policy makers, though, have long predicted that as the U.S. economy strengthens, Canadian exports will recover.

Exports in July rose by 1.4 percent to a record C$45.54 billion, boosted by higher shipments of motor vehicles and parts. Volumes increased by 1.1 percent while prices grew by 0.3 percent.

"This is very good news ... when the volumes actually (grow), that's where the export employment figures start to increase," Export Development Canada chief economist Peter Hall told Reuters.   Continued...