Canada’s trade deficit unexpectedly widened in July as exports to the European Union fell to the lowest since 2010.
The nation’s trade gap expanded to C$931 million ($887 million) during the month, from C$460 million in June, Statistics Canada said today in Ottawa. The July gap exceeded the most pessimistic forecast in a Bloomberg survey of economists. The median of the 22 responses predicted a deficit of C$250 million.
Canada’s economy is being weighed down by what the Bank of Canada calls the slowest export recovery since World War II, driven in part by tepid growth among its major trading partners. Shipments to the European Union fell 16 percent in July to C$2.6 billion, the lowest since April 2010.
“Weak demand in Europe is clearly hurting exporters,” Benjamin Reitzes, an economist at BMO Capital Markets in Toronto, said in a note to investors.
The July trade gap was the 19th in a row and extends the longest streak of deficits in at least a quarter century.
The Canadian dollar weakened after the report, trading at C$1.0514 per U.S. dollar, down 0.2 percent, at 9:33 a.m. in Toronto, after rising to as high as C$1.0479 earlier today.
Exports fell 0.6 percent to C$39.2 billion on a 7.3 percent drop in shipments of metal and non-mineral products. Unwrought precious metals and precious metal alloys, including gold, led declines in that category with a 17 percent decline.
Shipments of aircraft and other transportation equipment fell 22.8 percent in July. Energy and forestry-product exports led gains, recording increases of 1.7 percent and 8.2 percent.
Imports rose 0.6 percent to C$40.1 billion, with consumer goods, the largest component, climbing 1 percent.
The volume of exports fell 1.7 percent and import volumes rose 1.0 percent.
Economists anticipate exports will eventually accelerate in the second half after flooding in Alberta crimped exports earlier this year. Shipments of Canadian goods abroad slowed to a 0.9 percent pace in the second quarter.
An improving outlook for trade will bolster growth to 2.1 percent in the third quarter, from 1.7 percent in the second quarter, according to economists surveyed by Bloomberg.