Gloomy Canada data show crisis

Wed Jun 10, 2009 10:54am EDT
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By David Ljunggren

OTTAWA (Reuters) - Canada unexpectedly posted a trade deficit in April on slumping exports while new house prices fell by the most in almost two decades, showing the economic crisis is still biting despite talk of a recovery.

The trade deficit for April was $179 million, the third time the balance had slipped into the red since December. Until that month Canada -- which relies heavily on exports -- had posted surpluses for almost 33 years.

Analysts, who variously called the data "pretty dismal" and "simply bad news", had on average predicted a $1 billion surplus after a $1 billion surplus in March.

Statistics Canada said exports fell 5.1 percent to $30.79 billion, the lowest figure since the $30.18 billion recorded in June 1999, on smaller shipments of industrial goods, machinery and equipment and energy products. It also cited a 3.2 percent reduction in prices.

The figures reflect the continuing damage that the world economic crisis is wreaking on Canada, a leading commodity producer which sends 75 percent of its exports to the United States. Exports have declined by 30.6 percent since July 2008.

"Clearly, Canada's export sector continues to struggle against a tide of sluggish demand, but also the headwinds brought about from a pretty significant appreciation in the Canadian dollar, which gained a lot of traction in April," said Charmaine Buskas, economics strategist at TD Securities.

"The undercurrent in trade is unlikely to significantly change in the near term. The Canadian dollar continues to broadly rally against the U.S. dollar and is poised to appreciate even further in the near term. This complicates the export profile."

April imports dropped 1.5 percent to C$30.96 billion, the lowest since the $30.89 billion recorded in December 2004, on lower volumes of imports of machinery and industrial goods. Imports have dropped by 21.6 percent since last July.   Continued...

<p>The Canadian flag is seen on top of a flagpole in the midst of high-rise buildings in the financial district of Toronto April 3, 2009. REUTERS/Mark Blinch</p>