(Adds Statistics Canada making clear that export slump was largest since July 2017, not July 2007)
By David Ljunggren and Fergal Smith
OTTAWA/TORONTO, March 6 (Reuters) - Canada racked up a record trade deficit in December as the value of exports slumped the most in more than a decade because of lower crude oil prices, boosting the case for the central bank to move cautiously on raising interest rates further.
The deficit widened to C$4.59 billion ($3.43 billion) in December as the value of exports slumped by the most in more than a year as a result of weak crude prices, Statistics Canada said on Wednesday.
That was much wider than the C$2.80 billion shortfall predicted by analysts in a Reuters poll, and exceeded the previous record gap, C$3.99 billion, in September 2016.
“A lot of the softening looks like it can be traced back to disruptions in the energy sector and oil prices, so there is still some reason to think that there are transitory factors at play that will ease going forward,” said Nathan Janzen, senior economist at Royal Bank of Canada.
“If you are the Bank of Canada, it is yet another reason to move off to the sidelines in terms of the rate hiking cycle.”
The central bank, which has tightened by 125 basis points since July 2017, is widely expected to hold interest rates steady on Wednesday. An announcement is due at 10 a.m. ET (1500 GMT).
A majority of analysts anticipate one more hike in 2019, though recent data has clouded the outlook and could force a more dovish tone.
Exports fell by 3.8 percent in December, the largest monthly drop since a 4.5 percent plunge in July 2017, as weak prices slashed the value of crude shipments by 28.7 percent. Canada is a major oil exporter.
Imports increased by 1.6 percent, the first gain since May, on higher imports of energy products.
The Canadian dollar held near its lowest in about two months at about 1.34 to the U.S. dollar, or 74.63 U.S. cents, after release of the data. A large trade gap had been expected by market participants after a report last Thursday showed a widening in the fourth quarter current account deficit.
Publication of the December trade data was delayed from Feb 7 because of a partial U.S. government shutdown.
Separate data from Statistics Canada showed that the labor productivity of Canadian businesses fell by 0.4 percent in the fourth quarter as output remained steady while the hours worked rose.
Reporting by David Ljunggren in Ottawa and Fergal Smith in Toronto; Editing by Bernadette Baum and Steve Orlofsky