Trade surplus up, business confidence dips

Wed May 11, 2011 11:22am EDT
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By Randall Palmer

OTTAWA (Reuters) - Canada's trade surplus bounced higher in March after two months of declines as broad increases in exports outstripped higher imports, Statistics Canada said on Wednesday.

In a separate release, the Conference Board of Canada said business confidence declined slightly in the first quarter from a 10-year high but businesses were still highly optimistic about the near-term future in Canada.

The trade surplus rose to C$627 million ($653 million) in March from C$356 million in February, which was revised higher from an originally reported C$33 million.

Exports rose 3.5 percent to C$37.37 billion and imports climbed 2.8 percent to C$36.75 billion. Both categories had fallen in February. Export volumes were up 2.5 percent and import volumes 3.2 percent, Statistics Canada said.

"The high-flying Canadian dollar doesn't appear to be dampening enthusiasm for Canadian exports as they grew 14.2 percent annualized (after adjusting for inflation) over the past two quarters, despite the currency pushing through parity (with the U.S. dollar)," BMO Capital Markets economist Benjamin Reitzes said.

The improved trade balance was roughly in line with a prediction of a C$500 million surplus in a Reuters survey of analysts.

The Conference Board's Index of Business Confidence fell to 106.2 (with a base of 100 in 2002) from a decade high of 109.5 in the final quarter of 2010.

"The drop from the previous period does not indicate any dramatic changes in the business outlook. Respondents remain highly optimistic about the near-term future in Canada," the Conference Board said.   Continued...

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