Canada’s trade deficit unexpectedly widened to a record in July as exports to the U.S. fell, government figures showed, adding to evidence the country’s economic recovery is being crimped by its southern neighbor.
The deficit widened to C$2.7 billion ($2.6 billion) in July, the biggest gap since the agency’s records began in 1971, from a revised C$1.8 billion gap in June, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg predicted the deficit would narrow to C$800 million from an initially reported June gap of C$1.1 billion, according to the median of 15 estimates.
The figures suggest international trade this year may be more of a drag on the economy than initially forecast. The Bank of Canada in July predicted trade will shave 1.6 percentage points from Canada’s growth this year. Yesterday, the central bank raised its benchmark interest rate for a third time this year to 1 percent, saying it expects households and businesses to spend even as the outlook for the U.S. economy weakens.
Canada’s trade surplus with the U.S., its largest trade partner, narrowed to C$1.2 billion in July from C$2.4 billion the prior month.
The Canadian dollar maintained gains following the report. It traded at 1.0328 per U.S. dollar at 8:42 a.m. in Toronto, 0.5 percent stronger than late yesterday, after earlier touching 1.0321. One Canadian dollar buys 96.85 U.S. cents.
Exports to all countries dropped 0.7 percent in July to C$32.8 billion. Exports of forestry products were down 5.3 percent and machinery and equipment sales fell 1.9 percent. Exports of energy products dropped 0.8 percent, while shipments of “other consumer goods” fell 7.3 percent. The volume of exports slid 0.6 percent, while prices fell 0.2 percent.
Imports rose in July, gaining 2 percent on purchases of energy products that advanced 12 percent. Automotive imports into Canada gained 2.9 percent, the statistics agency said. Prices for imported goods rose 0.6 percent, while volumes of Canadian purchases of goods abroad advanced 1.4 percent from June, the agency said.
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