OTTAWA (Reuters) - Canada’s trade deficit leapt in April as imports hit a record high and exports edged down, a further sign that exporters’ woes are helping to crimp growth, Statistics Canada data indicated on Tuesday.
The April deficit hit C$567 million ($550 million), slightly more than the C$550 million shortfall analysts had expected. Statscan also revised March’s initial C$24 million surplus to a deficit of $3 million.
The revision means Canada has posted 16 consecutive monthly trade deficits as exporters struggle to cope with a strong Canadian dollar and uncertainty in major markets such as the United States and the European Union.
The Bank of Canada repeatedly expresses concern about sluggish exports - a major driver of the economy - and cites that as reason for keeping interest rates at near-record lows.
April’s slight drop in exports followed a 2.6 percent advance in March, which Statscan revised sharply downward from an initial 5.1 percent jump. March’s relatively strong numbers helped underpin first-quarter growth.
TD Securities chief Canada macro strategist David Tulk noted that net exports were still contributing to first-quarter growth. But conditions were likely to become more challenging, with growth expected to remain below its trend rate until U.S. private sector demand improves, likely in the second half.
The data, along with unimpressive U.S. trade figures, helped pull down the value of the Canadian dollar. It traded at C$1.0323 to the U.S. dollar, or 96.87 U.S. cents, below Monday’s finish at C$1.0278, or 97.30 U.S. cents.
Imports rose 1.2 percent in April, the fourth consecutive month-on-month advance, to a record C$40.84 billion. The increase was led by imports of energy products, motor vehicles and parts.
Exports slipped by 0.2 percent to C$40.27 billion on lower shipments of metal ores, energy products and industrial machinery.
For a graphic on Canadian trade please see link.reuters.com/muj56t
Some analysts suggested the figures were not as downbeat as they seemed — export volumes grew 0.5 percent from March and were up 3.9 percent from April 2012.
Peter Hall, chief economist at Export Development Canada, said exports had grown at an annualized rate of more than 13 percent since last November.
Derek Holt and Dov Zigler of Scotiabank Economics said the key question was whether trade volumes would hold up or whether natural resource exports would stay volatile. Exports of energy products, metal ores and non-metallic minerals accounted for almost 27 percent of all exports in April.
“That’s an open question, and one that matters increasingly for the Canadian economy,” they said in a note to clients.
Exports to the United States, which took 74.6 percent of all Canadian exports in April, grew 1.8 percent, while imports grew 1.9 percent to a record high. The trade surplus with the United States grew to C$3.87 billion from C$3.82 billion in March.
Exports to countries other than the United States dropped by 5.6 percent. Hall said he was watching China, where the manufacturing sector shrank for the first time in seven months in May.
Reporting by David Ljunggren; Editing by Chizu Nomiyam, Janet Guttsman and Dan Grebler