Canadian exports to U.S. end long dry spell

Canada broke out of its monthslong export slump in October, thanks to the U.S., according to analysts.

Exports advanced 2.7 percent in October, the first gain in five months, Statistics Canada said Tuesday from Ottawa, driven largely by a jump in sales to the country's biggest trading partner. The increased shipments halved the trade deficit to $1.2 billion, below economist forecasts.

It was unexpected strength for a trade sector that has been a great disappointment to policymakers this year, hampering an economy that is otherwise firing on all cylinders. Canada's economy slowed sharply in the third quarter because of weak exports.

"This is a positive report, but there's still a lot of room for improvement," Benjamin Reitzes, a strategist at BMO Capital Markets in Toronto, wrote in a research note.

Exports in recent months had suffered one of their biggest tumbles ever, fueling concern that the nation's currency accelerated too quickly earlier this year. A recent drop in the Canadian dollar though -- down almost 5 percent since peaking in September -- may be providing some relief. So is steady domestic demand in the U.S.

Canada's improved trade performance was driven by a 4.1 percent increase in exports to the U.S., helping to widen Canada's surplus with its largest trading partner to $2.7 billion in October from $1.5 billion a month earlier. Separately, the Commerce Department reported the U.S. trade deficit widened in October to a nine-month high.

One factor was a jump in shipments of refined petroleum products, which Statistics Canada said may have been because of lower inventories along the East Coast.

In total, Canada recorded higher shipments in nine of 11 sectors tracked by the agency.

Imports fell 1.6 percent in October, reflecting an 8.1 percent drop in the motor vehicle category. The agency cited work stoppages and planned shutdowns for the drop. Deficits between June and September were revised down by $525 million.

In terms of volume, adjusting for price changes, exports rose 1.2 percent while imports fell 3.9 percent.

In Beijing, Prime Minister Justin Trudeau said Canada has high hopes for a trade agreement with China but won't rush into negotiations that could affect their economies for generations to come.

Trudeau told reporters that Canada is "constantly engaged" on trade issues with China as part of exploratory talks on a trade pact launched two years ago that have tackled issues such as agricultural exports.

Business on 12/06/2017

Upcoming Events