WRAPUP 1-Canada's trade deficit biggest in a year in December

Thu Feb 6, 2014 12:00pm EST
 
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* Trade deficit C$1.66 billion in December

* Ivey Purchasing Managers Index recovers to 56.8

* Canadian dollar bounces in choppy trade

By Randall Palmer and Leah Schnurr

OTTAWA/TORONTO, Feb 6 (Reuters) - Canada's trade deficit jumped to the highest level in a year in December, a government report showed on Thursday, the latest in a series of disappointing economic figures that are expected to keep the Bank of Canada from raising interest rates this year.

Separate data that showed a rebound in the pace of purchasing activity in January offset some of the initial gloom generated by the trade report and helped the Canadian dollar regain some ground after an early fall.

The trade deficit widened to C$1.66 billion ($1.49 billion), data from Statistics Canada showed, with the value of imports hitting a record high despite a drop in volumes.

The deficit was almost C$1 billion more than economists had expected and the biggest since November 2012. Last November's gap was also revised sharply higher to C$1.53 billion from an originally reported C$940 million.

"No doubt about it, the fourth quarter was a setback for Canada's export sector, with trade expected to weigh on economic growth," Leslie Preston, economist at TD Bank Group, wrote in a note.   Continued...