UPDATE 2-Canada May trade deficit shrinks as imports, exports drop

Wed Jul 3, 2013 9:58am EDT
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* Canada exports down 1.6 percent, imports off 3.2 percent

* Exporters struggling with uncertain markets

By David Ljunggren

OTTAWA, July 3 (Reuters) - Canada's trade deficit shrank by almost 70 percent in May from April but only because imports fell twice as fast as exports did, Statistics Canada said in a downbeat report on Wednesday that reflected challenges for the economy.

The trade deficit - the 17th in a row - dropped to C$303 million ($289 million) in May from an upwardly revised C$951 million in April. Analysts had predicted a shortfall of C$730 million.

The data indicates exporters are still struggling to cope with uncertain foreign markets, while lower imports reflect a sluggish domestic economy.

Exports dropped by 1.6 percent as shipments of metal and non-metallic mineral products dropped by 15.0 percent while motor vehicles and parts fell by 3.8 percent.

After four consecutive monthly increases, imports slumped by 3.2 percent on lower shipments of energy products, which dropped by 18.4 percent, as well as metal ores and non-metallic minerals.

"It's quite a flat story ... I'm not terribly inspired by anything really I see inside of the details either. The auto sector is particularly soft," said Peter Hall, chief economist at Export Development Canada.   Continued...