Canada’s merchandise trade deficit widened in August, exceeding even the most bearish forecast in a survey of economists as energy and consumer goods led the biggest drop in exports in more than three years.
The deficit expanded to C$2.53 billion ($1.93 billion) from July, Statistics Canada reported Tuesday from Ottawa. None of the 18 economists in a Bloomberg survey predicted the August deficit would be wider than C$2 billion. The median forecast was for a C$1.2 billion shortfall.
Exports fell 3.6 percent to C$44 billion, including a 20.9 percent drop in crude oil and bitumen on lower prices. Consumer goods fell 8 percent to C$5.91 billion while the metals and non-metallic mineral category declined 9.7 percent to C$4.54 billion.
The report tempers other evidence the world’s 11th largest economy is in a strong rebound from the shock of lower oil prices that derailed output in the first half of the year. Exports started the third quarter with 2.4 percent growth in July, and gross domestic product rose in June and July after five prior contractions.
The trade report “is negative for August GDP but it’s one month of data,” said Krishen Rangasamy, senior economist at National Bank Financial in Montreal. “Canada is going to return to growth in the third quarter.”
Canada’s dollar was little changed at C$1.3077 per U.S. dollar at 9:52 a.m. Toronto time, and has weakened 11 percent this year.
Tuesday’s trade data, along with the September jobs figures due Oct. 9, are among the last major economic reports due before an Oct. 19 election that’s been fought in part over Prime Minister Stephen Harper’s economic management.
On Monday, Harper announced he plans to implement a trade pact among a dozen Pacific-rim nations, saying it would lower tariffs on exports and opening up markets for farm and automobile products. “This deal is without any doubt whatsoever in the best interest of the Canadian economy.”
Liberal Party Leader Justin Trudeau, leading Harper in recent polls, said he is pro trade and must see the full details before deciding, and New Democratic Party Leader Tom Mulcair said Harper was “selling out our auto workers and our farming families.”
The trade figures Tuesday also suggested domestic demand remains resilient, with imports rising for a fourth consecutive month, by 0.2 percent to C$46.5 billion. Exports of motor vehicles and parts also rose by 3.1 percent to C$7.85 billion.
The volume of exports declined 0.6 percent and import volumes fell 0.1 percent, Statistics Canada said. Volume figures adjust for price changes and can be a better indicator of how trade contributes to economic growth.
The agency also revised its figure for the July shortfall to C$817 million, from an initially reported C$593 million.
The August deficit moves toward the record C$3.56 billion deficit set in March, and Canada the cumulative year-to-date deficit at C$17.4 billion is also record.