OTTAWA (Reuters) - Canada’s trade surplus more than doubled in December from November as exports to a recovering U.S. economy grew to their highest since October 2008 and hit a record for non-U.S. trade partners, Statistics Canada said on Friday.
The report was welcome news for the hard-hit export sector and bodes well for growth in the fourth quarter and in 2012.
The December trade surplus bulged to a three-year high of C$2.69 billion ($2.69 billion), from C$1.17 billion surplus in November, topping even the highest of 20 economists surveyed by Reuters. The median forecast was for a C$550 million surplus.
“There’s a broad industrial base of expansion that we can be happy about in the December numbers. There is a broad regional base to the expansion too,” said Peter Hall, chief economist at Export Development Canada, a federal agency that assists exporters.
“If you put those two things together it’s giving us great momentum heading into the next year.”
Shipments to the United States, which buys about 70 percent of Canadian exports, jumped 5.3 percent in the month and were up 14.8 percent on a year-over-year basis.
The data provided support for the Canadian dollar, which had been wilting on concerns over the Greek debt deal. The currency pared losses and firmed to C$1.0025 to the U.S. dollar, or 99.75 U.S. cents, shortly after the data was released at 8:30 a.m. (1330 GMT). It was still down from Thursday’s close of C$0.9956, or $1.0044.
Canada’s export sector was the hardest hit in the 2008 recession and has struggled since, due to weak demand in its traditional U.S. market and a strong Canadian dollar.
In nominal terms, exports in December were above their pre-recession peak but they fell short of that benchmark when taking into account inflation.
Graphic on Canada’s trade performance 2008-2011
Exports to countries excluding the United States hit a new record high, rising 2.5 percent to C$11.8 billion.
Overall exports rose 4.5 percent to C$42 billion, led by machinery and equipment. But exports grew across all sectors.
Imports edged up by 0.8 percent to C$39.3 billion, the second-highest on record, as strong purchases of metals and autos offset a slide in energy product imports.
The strong exports suggest a rebound in December growth after a 0.1 percent contraction in November and no change in the size of the economy in October.
“This will bode well for the fourth-quarter real GDP print which we are currently tracking in the neighborhood of 2.0 percent,” Mazen Issa, Canada macro strategist with TD Securities, said in a note to clients.
“Heading forward however, we remain cautious against a backdrop of an uncertain global environment,” he added.
Reporting By Louise Egan; Editing by Theodore d'Afflisio and Janet Guttsman