OTTAWA (Reuters) - In a sign the spluttering Canadian economy might grow faster than expected in the first quarter, surging exports helped produce the country’s first trade surplus in a year in March.
Statistics Canada said on Thursday that a 5.1 percent jump in exports was behind an unexpected trade surplus of C$24 million ($24 million). Traders had predicted a shortfall of C$720 million after the revised C$1.25 billion deficit in February.
Canada last recorded a trade surplus - a modest C$45 million - in March 2012.
Canada’s export sector - a major driver of the economy - has long struggled with a strong Canadian dollar and weak international markets. It is also heavily reliant on the United States, which has been showing signs of recovery.
Other recent figures, including strong February growth figures on Tuesday, also suggest the domestic economy is starting to pick up speed.
Last month, the Bank of Canada predicted first quarter growth of just 1.5 percent on an annualized basis.
“It now looks like trade will add significantly to real GDP growth in the first quarter,” said Robert Kavcic of BMO Capital Markets in a note to clients.
“We upgraded our Q1 Canadian growth forecast to 2.3 percent (from 1.5 percent) after Tuesday’s real GDP report, and these trade results fully support that change.”
The Canadian dollar firmed to a session high of C$1.0060 to the U.S. dollar, or 99.40 U.S. cents. It closed at C$1.0081, or 99.20 U.S. cents on Wednesday.
In March, exports jumped by 5.1 percent, the biggest leap since the 5.3 percent recorded in March 2011. Exports of energy grew by 3.9 percent while shipments of motor vehicles and parts increased by 6.1 percent.
Peter Hall, chief economist at Export Development Canada, said the export figures reflected a U.S. economy which is still recovering from last year’s Superstorm Sandy, which hit the eastern seaboard in late October, and fears over the impact of wrangling over the budget.
“I am thrilled about the fact we have a 5.1 percent month and that it’s very broadly based a lot of industries. That shows to me that this is not a flash in the pan,” he told Reuters.
Hall echoed Bank of Canada Governor Mark Carney, who said this week that private industry rather than government spending was fueling U.S. growth.
“This is a report that illustrates what we’ve been trying to say for an awfully long period of time, and that is that fundamental underlying growth in the United States is very strong,” Hall said.
Exports to the United States, which took 72.8 percent of all Canadian exports in March, grew by 4.0 percent while imports were up by 2.0 percent. As a result, the trade surplus with the United States grew to C$3.82 billion from C$3.18 billion in February
Imports increased by 1.7 percent, thanks largely to an 18.1 percent leap in imports of crude oil and bitumen after three consecutive monthly declines.
Additional reporting by Alastair Sharp; Editing by Kenneth Barry and Nick Zieminski