Canada reported the largest merchandise trade surplus in more than two years in June as exports reached a record on gains in crude oil and metals.
The surplus was C$1.86 billion ($1.69 billion) in June, the widest since December 2011, Statistics Canada said today in Ottawa. Economists forecast the trade account would be balanced, according to the median of 17 forecasts in a Bloomberg News survey. The agency revised the May figure to a C$576 million surplus, from a C$152 million deficit.
Exports rose 1.1 percent to C$45.2 billion, higher than the C$44.5 billion peak set in 2008 before the last recession. Shipments of crude oil and bitumen rose 2.8 percent to a record C$8.9 billion. Metal and non-metallic minerals exports rose 9.7 percent to C$4.8 billion.
Bank of Canada Governor Stephen Poloz is counting on stronger exports this year and next to lead the economy back to full output. The central bank’s key interest rate has been at 1 percent since September 2010 through a period of what Poloz called “serial disappointment” in global demand.
“The rotation to more export-driven growth could finally be taking shape,” Benjamin Reitzes, a senior economist at BMO Capital Markets in Toronto, wrote in an e-mailed commentary.
Canada’s dollar reversed losses after the report, climbing 0.3 percent to C$1.0930 per U.S. dollar at 11:34 a.m. in Toronto. The nation’s currency has depreciated 5.1 percent in 12 months, making its exports cheaper for foreign buyers.
“The relatively weak Canadian dollar and the growing recovery in the United States both bode well for continued strong export growth through the remainder of the year,” Toronto-Dominion Bank economist Brian DePratto wrote in a research note.
Today’s figures helped create a surplus for the April-to-June period, the second such quarterly gain following two years of deficits, BMO Capital Markets said today.
“There is solid demand pretty much across North America -- we are growing faster than the economy,” Canadian National Railway Co. Chief Marketing Officer Jean-Jacques Ruest said on a July 21 investor call.
The trade balance still hasn’t recovered from the global recession triggered by the 2008 financial crisis. Surpluses averaged about C$4.8 billion from 2000 through 2007. Canada’s last recession was a contraction of output from the fourth quarter of 2008 through the second quarter of 2009.
Today’s report showed imports fell 1.8 percent to C$43.3 billion in June, with declines across eight of 11 major categories tracked by Statistics Canada.
The volume of exports advanced 1.0 percent and import volumes fell 1.7 percent, 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$5 billion in June from C$5.44 billion a month earlier, while the deficit with the European Union narrowed to C$508 million from C$1.39 billion. Exports make up about one-third of Canada’s economy, with about 75 percent of the shipments going to the U.S.
The weaker currency is “a bonus” to exporters in a period where strengthening U.S. demand is creating a broad recovery, Peter Hall, chief economist at Export Development Canada, said in a telephone interview.
“There is something very durable about what’s going on here,” Hall said.