CORRECTED-UPDATE 1-Canada trade deficit widens in May as exports fall

Tue Jul 7, 2015 11:11am EDT
 
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(Corrects decline of non-energy exports in fourth paragraph to 1 percent from 0.6 percent)

OTTAWA, July 7 (Reuters) - Canada's trade deficit widened in May to its second-largest on record as exports fell for the fifth month in a row in another gloomy sign for the economy, data from Statistics Canada showed on Tuesday.

Canada posted a trade deficit of C$3.34 billion ($2.63 billion), the eighth consecutive month of deficits and exceeding the C$2.50 billion deficit economists had forecast. April's deficit was revised to a slightly wider C$2.99 billion.

Exports fell by 0.6 percent in May, with export volumes down 2.5 percent amid a decline in metal and non-metallic mineral products. Imports edged up 0.2 percent.

Energy product exports increased 1.3 percent as a rise in refined petroleum energy products was tempered by a decline in exports of crude oil and bitumen. Non-energy exports, which the Bank of Canada is hoping will help drive stronger growth, fell 1 percent. The central bank will decide on interest rates next week with markets pricing in about a 45 percent chance it will cut rates again after January's surprise cut.

Oil is a major export for Canada and cheap crude prices have weighed on the economy. After a contraction in the first quarter and a weak start to the second quarter, Canada is at risk of falling into a recession for the first time since the 2008-09 global credit crisis.

Exports to the United States declined 0.3 percent and Canada's trade surplus with its neighbor to the south narrowed to C$2.12 billion. Canada's trade deficit with countries other than the United States widened to C$5.46 billion as exports fell.

($1=$1.2710 Canadian) (Reporting by Leah Schnurr, Editing by Franklin Paul)