OTTAWA (Reuters) - Soaring exports of crude oil and other energy products unexpectedly tipped Canada’s trade balance into surplus in December after nine months of deficits, fueling hopes the much-coveted export recovery is gaining traction.
The trade surplus of C$3.0 billion was the biggest since October 2008, Statistics Canada said on Friday in news that nudged the Canadian dollar higher. Analysts surveyed by Reuters had forecast the deficit would grow slightly in December to C$350 million from $115 million in November, revised from C$81 million previously.
The surplus with the United States -- by far Canada’s biggest trading partner -- was also the biggest since October 2008, jumping to C$5.1 billion from C$3 billion in November as exports surged to their highest value in over two years.
The Canadian dollar firmed to C$0.9929 to the U.S. dollar, or $1.0072, up from around C$0.9958 to the U.S. dollar, or $1.0042 immediately before the release.
Exports in December took flight with a 9.7 percent rise in value, and energy products accounted for over half that growth. Bigger volumes explained most of the 25 percent jump in energy product exports.
Shipments of industrial goods and materials, machinery and equipment, agricultural and fishing products and forestry products all recorded hefty gains.
Canadian exporters were badly hurt by the global recession and still face strong headwinds from the strong Canadian dollar and weak U.S. demand.
Net exports exerted a drag on economic growth last year but the Bank of Canada says it expects exports and business investment to be the main drivers of growth this year. With the currency posing a challenge, policy makers have been urging exporters to invest in new technology and aggressively seek new markets in order to stay competitive.
Exports to non-U.S. markets grew 39.3 percent in December year-on-year compared with 7.5 percent growth for exports to the United States.
Imports crept 0.7 percent higher as heavy purchases of energy products were offset by a decline in imports of other consumer goods.
Reporting by Louise Egan and Howaida Sorour, Editing by Chizu Nomiyama