Canada’s merchandise trade deficit narrowed more than economists forecast in January as imports fell from a record.
The deficit of C$177 million ($161 million) followed a December shortfall that was revised to C$922 million from C$1.66 billion, Statistics Canada reported today from Ottawa. The lowest deficit estimate of 18 economists surveyed by Bloomberg was C$500 million, and the median forecast was C$1.2 billion.
The trade balance has been in deficit for all but two months since the start of 2012 as exports haven’t recovered from the last recession and debt-fueled consumer spending boosts imports. Bank of Canada Governor Stephen Poloz has said that exports and business investment must take over as sources of growth to ensure a sustainable expansion.
Imports fell 1.6 percent to C$40.8 billion in January from December’s record C$41.5 billion, Statistics Canada said. Motor vehicle sales led the decline, falling 5.9 percent to C$6.75 billion.
Exports rose 0.2 percent to C$40.6 billion as energy shipments rose 9.2 percent to C$10.4 billion, Statistics Canada said. The increase was due to higher energy prices, the agency said in the report.
The data suggest that after adjusting for prices, trade was a drag on economic growth in January, even as the trade gap narrowed. The volume of exports declined 5.3 percent, faster than the import volume decline of 2.6 percent, Statistics Canada said. Volume figures adjust for price changes and can be a better indicator of how trade contributes to the expansion.
The surplus with the U.S. widened to C$3.62 billion in January from C$3.17 billion a month earlier. Exports make up about one-third of Canada’s economy, with about 75 percent of the shipments going to the U.S.