Canada 1Q Current Account Deficit Narrows More Than ExpectedGreg Quinn
Canada’s current account deficit narrowed more than economists forecast in the first quarter on rising commodity exports including record crude oil shipments.
The deficit of C$14.1 billion (C$13.6 billion) from January to March reported by Statistics Canada in Ottawa today was smaller than the C$15.6 billion shortfall forecast in a Bloomberg News economist survey with 16 responses. The fourth quarter gap was revised to C$14.6 billion from C$17.3 billion.
The world’s 11th largest economy has reported deficits in its broadest measure of international trade since the end of 2008, with exports of goods restrained by a strong Canadian dollar and weak global demand. The Bank of Canada said yesterday that weak trade will continue to keep the economy from reaching full output until mid-2015.
“The deficit is still fairly wide as a share of gross domestic product, over 3 percent, and not therefore a compelling base of support for the Canadian dollar,” said Avery Shenfeld, chief economist at CIBC World Markets in Toronto. “We will need stronger prices for Canada’s resource exports to bring the current account balance into better line from here.”
The currency was little changed at C$1.0352 per U.S. dollar at 9:49 a.m. in Toronto. It touched C$1.421 yesterday, its weakest level since June 5, 2012. One dollar buys 96.59 U.S. cents.
The first-quarter deficit in merchandise trade narrowed to C$1.69 billion from C$2.14 billion, as higher exports of goods such as crude oil and metals outpaced growth in imports.
The deficit in investment income narrowed to C$4.88 billion from C$5.11 billion, and the shortfall in services declined to C$5.76 billion from C$5.99 billion.
Statistics Canada today also reported the industrial product price index fell 0.8 percent in April, the most since December 2011, led by a 4.9 percent drop in diesel fuel. The decline in prices paid to manufacturers for their wares exceeded all 11 estimates in a Bloomberg economist survey that had a median of a 0.3 percent decline.
The raw-materials price index fell 2.2 percent in April from March, the most since June 2012. The median estimate in a Bloomberg survey of 10 economists was for a 0.9 percent drop.
Over the 12 months ending in April, industrial prices were little changed while raw-materials costs fell 1.9 percent, suggesting factory profit margins widened.