Canada registered a C$15.5 billion (C$14.6 billion) current account deficit in the third quarter, wider than economists forecast.
The deficit in the July-September period narrowed from a revised C$15.9 billion second-quarter gap, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg predicted the deficit would shrink to C$14.4 billion, the median of 13 responses, from an earlier-reported C$14.6 billion.
Although the deficit narrowed, “on net it’s almost a negative because the level is higher” than forecast, said Robert Kavcic, a Bank of Montreal senior economist in Toronto. “That suggests to us the Canadian dollar is overvalued and is probably going to weaken over the next year or so.”
Current account deficits began in 2008 during the global financial crisis, and will continue for at least another year to equal 2.6 percent of the country’s gross domestic product in the fourth quarter of 2014, according to a Bloomberg economist survey. The Bank of Canada has said the country is in the weakest export recovery since World War II.
The Canadian dollar was little changed at C$1.0588 per U.S. dollar at 9:42 a.m. in Toronto. Yesterday it touched C$1.0603 per U.S. dollar, the lowest since July. One dollar buys 94.45 U.S. cents.
A deficit in third-quarter goods trade narrowed by about C$300 million to C$2.2 billion as exports rose faster than imports, Statistics Canada said. The deficit for investment income shrank by C$600 million to C$5.9 billion on a decline in profits sent to foreign owners.
The rise in the second quarter-deficit estimate was led by the balance in investment income, Statistics Canada said.
Statistics Canada also said today that manufacturers’ prices and raw materials costs fell in October.
The raw-materials price index decreased 2.3 percent, less than the 2.0 percent drop economists predicted according to the median estimate in a Bloomberg survey with five responses.
The industrial product price index, which measures the price of finished goods, fell 0.3 percent. That index was forecast to decline 0.5 percent.
Over the 12 months ending in October, industrial prices advanced 0.8 percent while raw-materials costs rose 0.4 percent, suggesting factory profit margins widened.
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