OTTAWA (Reuters) - Canada’s long-suffering export sector snapped a five-month losing streak in June, showing the strongest surge in more than eight years and cutting the country’s trade deficit significantly, Statistics Canada said on Wednesday.
The trade shortfall for the month was C$476 million ($361 million), much less than the C$2.80 billion deficit forecast by analysts and far below the C$3.37 billion seen in May.
Exports jumped by 6.3 percent, the biggest month-on-month gain since a 6.9 percent bounce in December 2006. Shipments of consumer goods, which leaped by a record 17.2 percent, led the increase.
Those numbers will be of particular interest to the Bank of Canada, which cited disappointing non-energy exports as one reason it cut interest rates for a second time this year in July.
“Canada has likely skidded through the soft patch and is ready for a comeback over the next two quarters ... the non-energy sector is likely to continue to benefit from an improving U.S. economy and low Canadian dollar,” said Diana Petramala of TD Economics.
Exports to the United States, which accounted for 76.7 percent of Canada’s global total in June, jumped by 7.1 percent, while imports dropped 0.9 percent. As a result, Canada’s trade surplus with the United States rose to C$4.69 billion from C$2.15 billion in May.
Despite the stronger export performance, Canada’s trade shortfall in June was its ninth in a row, and the overall deficit year to date hit a record C$13.82 billion.
That is much bigger than the previous January-to-June record deficit of C$4.43 billion in 2012. Overall June imports dropped by 0.6 percent on weaker shipments of aircraft and other transportation equipment.
The Canadian dollar firmed to a session high of C$1.3142 to the U.S. dollar, or 76.09 U.S. cents, from a Tuesday close of C$1.3180 to the greenback, or 75.87 U.S. cents.
Export Development Canada chief economist Peter Hall, expressing what he called cautious optimism, said he had no reason to think any particular one-off factor had temporarily boosted exports in June.
“This gets the second half of the year off to a fantastic start ... it is the rebound that we had expected,” he said in an interview, citing a healthy 4.8 percent rise in export volumes. Export prices were up by 1.5 percent.
Additional reporting by Jeffrey Hodgson in Toronto; Editing by Lisa Von Ahn; and Peter Galloway