Canada posts surprise September trade surplus as energy imports drop

Tue Nov 4, 2014 1:38pm EST
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By David Ljunggren

OTTAWA (Reuters) - A rise in exports and a sharp drop in energy imports caused by refinery shutdowns helped Canada post a surprise trade surplus of C$710 million ($623 million) in September, Statistics Canada data showed on Tuesday.

Analysts had expected a deficit of C$100 million. The surplus - the fourth in five months - follows a revised C$463 million deficit in August.

Bank of Canada Governor Stephen Poloz has pointed to longstanding weakness in the export sector as one reason the country's economy is struggling to reach full potential.

Exports rose by 1.1 percent to C$44.79 billion. Increases were reported in eight of 11 sectors tracked by Statistics Canada, led by motor vehicles and parts, consumer goods and metal and nonmetallic mineral products.

Since the recession, exporters have struggled with a strong Canadian dollar and shaky foreign markets. They could get some relief, however, as the U.S. economic recovery continues and the loonie gradually weakens.

"We are now tracking a modest positive contribution from net exports for third quarter real GDP growth ... today's improvement in the trade balance suggests that the implosion in August trade was temporary in nature," TD Securities analyst Mazen Issa said.

Imports fell by 1.5 percent to C$44.08 billion, pulled lower by a 19.4 percent drop in energy products. This largely reflected the fact that some refineries were shut for scheduled maintenance.

News of the trade surplus did little to help the Canadian dollar, which had earlier dropped to a five-year low of C$1.1390, or 87.80 U.S. cents, on lower oil prices. It later sank further and at 10 a.m. EST (1500 GMT) was trading at C$1.1410, or 87.64 U.S. cents.   Continued...