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OTTAWA (Reuters) - The value of Canada's imports and exports both dipped in March on weaker energy prices, but analysts said growing export volumes meant the outlook for trade was brighter than it looked.
Statistics Canada said on Thursday the trade surplus rose to C$351 million ($351 million) from $273 million in February as imports declined at a faster rate than exports.
The surplus was smaller than the C$500 million forecast by market analysts.
Exports fell by 0.4 percent, the third consecutive monthly decline, as energy shipments decreased by 8.9 percent on an 8.0 percent drop in prices. Imports were down 0.6 percent, also on weaker energy prices.
Exports are particularly important for Canada, accounting for about 31 percent of gross domestic product in 2011.
Analysts said the drop in energy prices was obscuring the larger picture and noted the volume of exports climbed 1.0 percent from February, while imports were up by 0.6 percent.
"Some softening in resource prices masked a decent trade performance overall for Canada in both March and for all of the first quarter," said Douglas Porter, deputy chief economist at BMO Capital markets.
Exports of industrial goods and machinery increased by 6.2 percent on higher volumes and prices, while exports of machinery and equipment grew by 3.4 percent on increased volume.
"If you take (out) the decline in crude oil, which is mostly due to prices during the month, we actually had a banner month for exports," said Peter Hall, chief economist at Export Development Canada (EDC).
"Everything else ... is doing quite well. We just got swamped by a very negative oil number," he told Reuters.
Imports fell by 0.6 percent to a six-month low, pulled down by a 14.9 percent drop in imports of energy products. Imports of industrial goods and materials were down by 4.0 percent.
The trade data, along with healthier U.S. jobless claims, helped push the Canadian dollar to a session high of C$0.9980 versus the U.S. dollar, or $1.0020, on Thursday morning, up from Wednesday's finish at C$1.0009 against the U.S. dollar, or 99.91 U.S. cents. But the currency later fell back.
Last month the EDC forecast a 7.1 percent growth in exports this year on the back of a strong U.S. recovery.
"(March) exports of industrial products, machinery and equipment, and some consumer goods were notable, which we think is consistent with U.S. economic activity," said David Madani of Capital Economics.
Canada's exporters have had a hard time since the 2008 recession, which left them struggling to cope with weak markets as well as the continuing negative effect of the strong Canadian dollar.
Exports to the United States, which took 73 percent of all Canadian exports in March, fell by 2.1 percent, the third month-on-month drop in a row.
Canada's trade surplus with the United States dropped to C$4.62 billion in March from C$4.89 billion in February.
Separately, Statscan said the prices of new homes in Canada rose by 0.3 percent in March from February, the 12th consecutive monthly increase.
Reporting by David Ljunggren; Editing by Peter Galloway