Canada trade surplus widens to two-and-a-half year high of C$1.9 billion

Wed Aug 6, 2014 2:22pm EDT
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OTTAWA (Reuters) - Canada's trade surplus soared unexpectedly to a 2-1/2-year high of C$1.86 billion ($1.69 billion) in June, boosted by record exports and falling imports, Statistics Canada data indicated on Wednesday.

Market analysts had expected a flat trade balance in June, and Statscan revised May's data to a surplus of C$0.58 billion from an initial deficit of C$0.15 billion.

The June surplus was the largest since the C$2.43 billion recorded in December 2011.

The Bank of Canada has kept its key interest rate frozen at near-record lows since September 2010 and says it will not contemplate a hike until the sluggish economy - in particular the non-energy export sector - picks up.

The central bank and market analysts have frequently predicted that Canada, which sends 75 percent of all exports to the United States, will benefit as the U.S. economy recovers.

The value of exports rose by 1.1 percent to a record C$45.20 billion on metal and non-metallic mineral products, consumer goods and energy products.

This growth was due largely to higher export volumes, which increased by 1.0 percent. Prices rose by 0.2 percent.

"It looks as though trade is going to add more to GDP growth in the second quarter than previously expected. The rotation to more export-driven growth could finally be taking shape," said BMO Capital Markets economist Benjamin Reitzes.

The Canadian dollar CAD strengthened on the data, trading at C$1.0945 or 91.37 U.S. cents, stronger than Tuesday's close of C$1.0960 or 91.24 U.S. cents.   Continued...

A truck is loaded with a container at the Port of Montreal, September 27, 2010.  REUTERS/Shaun Best  (CANADA - Tags: TRANSPORT) - RTXSQDV