OTTAWA (Reuters) - Canada’s trade deficit in March shrank slightly to C$3.21 billion ($2.38 billion) but was still the 12th largest on record, Statistics Canada said on Thursday, underscoring the challenges still facing exporters.
Analysts in a Reuters poll had forecast a shortfall of C$2.45 billion. Statscan revised February’s deficit sharply upward to C$3.42 billion from an initial C$2.90 billion.
Canada, a major crude exporter, has been hit hard in recent years by lower oil prices and higher U.S. energy output, as well as a shift away from producing light trucks. It has posted just two trade surpluses since October 2014.
Exports grew by 3.2 percent with shipments of energy products posting a 7.7 percent gain. Crude oil export volumes, which had fallen by 10.9 percent from November to February, rose by 3.1 percent.
“We’re still not fully dug out of the hole that we put ourselves in the fourth quarter, but at least it’s a nice turn around in the export story,” said Ross Prusakowski, principal economist at Export Development Canada.
Prusakowski said there was modest upside potential for energy prices to increase further in 2019.
Exports of passenger cars and light trucks rebounded by 8.4 percent after dropping in February on lower auto output.
Markets were unimpressed and the Canadian dollar held to a near-two-week low of 1.3496 to the U.S. dollar, or 74.10 U.S. cents.
Imports increased by 2.5 percent to a record C$52.26 billion as imports of consumer goods such as clothing, footwear and accessories rose by 6.7 percent. Imports of airliners plunged by 50.7 percent on a slowdown in deliveries of U.S. aircraft.
Stephen Brown, senior Canada economist at Capital Economics, said export volumes looked set to rise further in April.
“We expect trade to make a positive contribution to second-quarter GDP growth,” he said in a note to clients.
Canada’s trade deficit with the world in the first quarter rose to C$10.13 billion, the highest shortfall since the second quarter of 2016.
Canada sent 74.2 percent of all its goods exports to the United States in March. Exports to the United States rose by 1.3 percent while imports shrank by 0.4 percent and as a result, Canada’s bilateral trade surplus grew to C$3.62 billion from C$2.99 billion in February.
Separately, Statscan said new-housing prices were unchanged in March for the seventh month out of eight, with little or no growth in the major markets of Toronto and Vancouver.
Reporting by David Ljunggren; Editing by Bernadette Baum and Steve Orlofsky