UPDATE 2-Oil slump helps push Canada trade deficit to record high

Tue May 5, 2015 11:16am EDT
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(Adds analysts' reaction, background)

By David Ljunggren

OTTAWA May 5 (Reuters) - Canada's trade deficit jumped to a record high C$3.02 billion ($2.50 billion) in March from February as imports surged and weak crude prices helped curb exports, Statistics Canada data showed on Tuesday.

Traders had forecast a deficit of C$850 million. Statscan revised February's deficit sharply higher to C$2.22 billion from an initial C$984 million, citing a sharp downward revision in energy exports.

Canada, a major energy exporter, has been hit hard by the plunge in oil prices and March marked its sixth consecutive monthly trade deficit.

Analysts said the data was not necessarily as worrisome as it seemed, noting a healthy increase in non-energy exports and other positive factors.

"With our neighbor to the south expected to bounce back in the second quarter, the (Canadian dollar) staying relatively weak ... and oil prices staging a modest comeback, Canada's trade profile is expected to improve in the months ahead," said BMO Capital Markets economist Benjamin Reitzes.

The value of exports, hurt by a prolonged slump in the price of oil, edged up 0.4 percent to C$42.50 billion. Exports of energy products fell by 8.9 percent, largely offsetting an 11.7 percent increase in shipments of motor vehicles and parts.

Excluding energy products, exports rose by 2.4 percent in March.   Continued...