Canada unexpectedly recorded its first trade surplus in 22 months in October as the value of imported goods fell for a second month.
The country ran a surplus of C$75.0 million ($70.4 million) after a revised shortfall of C$303 million in September, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg forecast a C$770 million deficit, based on the median of 18 forecasts.
The October surplus snaps the longest string of monthly trade gaps in at least a quarter century -- going back to December 2011 -- that’s been undermining the country’s ability to recover from the last recession. Net exports -- the difference between shipments abroad and imports -- have been a drag on the economy every year since 2009, and were the main hindrance for growth in the third quarter.
“We expect that to shift to being a contribution to growth in the fourth quarter,” Leslie Preston, an economist at Toronto-Dominion Bank, said in a phone interview, citing strong year-over-year increases in exports and buoyant demand in the U.S.
Exports to the U.S. are up 9.9 percent from a year ago, Statistics Canada reported today.
Bank of Canada Governor Stephen Poloz kept his main interest rate unchanged and said the risks of inflation staying below target “appear to be greater” than previously forecast. Policy makers kept the benchmark rate on overnight loans between commercial banks at 1 percent, where it’s been for more than three years, as expected by all 22 economists in a Bloomberg News survey.
The world’s 11th largest economy won’t reach full capacity until around the end of 2015, the central bank forecasts, with Poloz counting on gains in investment and exports to drive growth.
Imports fell 1.2 percent to C$40.4 billion in October, reflecting a drop in the value of purchases from non-Group of Seven countries. Imports from the U.S., Japan and European Union increased.
The decline in the value of imports largely reflected lower prices. In volume terms, imports fell 0.1 percent, Statistics Canada said.
Exports fell 0.3 percent to C$40.5 billion in October, also reflecting lower prices. In volume terms, exports were unchanged, Statistics Canada said.
Volume figures adjust for price changes and can be a better indicator of how trade contributes to economic growth.
The surplus with the U.S. narrowed to C$3.93 billion in October from C$4.13 billion a month earlier.
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