Record Canada trade deficit masks non-energy export strength

Wed May 6, 2015 12:53pm EDT
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By Randall Palmer

OTTAWA (Reuters) - A record Canadian trade deficit in March caused by plunging oil prices has masked an encouraging trend - strength in non-energy exports that the central bank is counting on to revive economic growth.

The report on Tuesday showing gains for sectors like auto parts and forestry, combined with encouraging outlooks from some company executives, suggest the Bank of Canada's forecast of an export-driven pickup in growth later this year is taking shape.

Auto parts in particular is "a sector that's getting fired up," said Peter Hall, chief economist with government export agency Export Development Canada (EDC). EDC sees 13 percent growth in automotive exports this year, helped by U.S. auto plants "bursting at the seams."

Trade data showed automotive exports up 12.9 percent from a year earlier, while forestry, building and packaging material exports climbed 25.0 percent.

The pickup is benefiting companies like Guelph, Ontario-based Linamar Corp, which expects double-digit sales growth this year and is expanding its Canadian facilities to meet new orders.

"We have an enormous amount of new business," Linamar Chief Executive Linda Hasenfratz said in an interview.

Canadian National Railway Co Chief Marketing Officer J.J. Ruest told analysts last month that the automotive and forestry sectors were bright spots for the carrier.

Foreign sales by the automotive sector, along with forestry and machinery and equipment, together amounted to close to the C$142.0 billion ($117.71 billion) energy exports registered in 2014.   Continued...

A tugboat pulling a transport truck on a barge crosses the harbour beside the container port in Vancouver, British Columbia June 8, 2012.   REUTERS/Andy Clark