OTTAWA (Reuters) - A rise in exports and a sharp drop in energy imports caused by refinery shutdowns helped Canada post a surprise trade surplus of C$710 million ($623 million) in September, Statistics Canada data showed on Tuesday.
Analysts had expected a deficit of C$100 million. The surplus - the fourth in five months - follows a revised C$463 million deficit in August.
Bank of Canada Governor Stephen Poloz has pointed to longstanding weakness in the export sector as one reason the country’s economy is struggling to reach full potential.
Exports rose by 1.1 percent to C$44.79 billion. Increases were reported in eight of 11 sectors tracked by Statistics Canada, led by motor vehicles and parts, consumer goods and metal and nonmetallic mineral products.
Since the recession, exporters have struggled with a strong Canadian dollar and shaky foreign markets. They could get some relief, however, as the U.S. economic recovery continues and the loonie gradually weakens.
“We are now tracking a modest positive contribution from net exports for third quarter real GDP growth ... today’s improvement in the trade balance suggests that the implosion in August trade was temporary in nature,” TD Securities analyst Mazen Issa said.
Imports fell by 1.5 percent to C$44.08 billion, pulled lower by a 19.4 percent drop in energy products. This largely reflected the fact that some refineries were shut for scheduled maintenance.
News of the trade surplus did little to help the Canadian dollar, which had earlier dropped to a five-year low of C$1.1390, or 87.80 U.S. cents, on lower oil prices. It later sank further and at 10 a.m. EST (1500 GMT) was trading at C$1.1410, or 87.64 U.S. cents.
Weaker oil prices threaten to undercut export gains made by the nonenergy sector. Energy accounted for 23.7 percent of all Canadian exports in September.
Doug Porter, chief economist at BMO Capital Markets, noted the nominal trade surplus for the first nine months of 2014 was C$5.3 billion, compared with a C$5.0 billion deficit for the same period in 2013. The surplus in energy products alone was C$66.6 billion, up from C$51.4 billion in 2013.
“Almost all of the improvement so far this year has come from energy trade ... given the deep dive in oil prices in the past two months, it looks like a matter of time before that groaning surplus begins to fade, even with production marching higher,” he said in a note to clients.
Exports to the United States, which took 75.1 percent of all Canadian exports in September, rose by 0.8 percent while imports grew by 0.7 percent. As a result, the trade surplus with the United States increased to C$3.92 billion from C$3.86 billion in August.
Graphic: Canada trade balance
Reporting by David Ljunggren; Editing by Nick Zieminski and Peter Galloway