Canada Swings to February Trade Surplus on Autos, EnergyGreg Quinn
Canada’s merchandise trade balance swung to a surplus in February, with rising exports of automobiles and energy outpacing record imports.
The surplus of C$290 million ($263 million) exceeded the C$200 million surplus that was the median of 17 predictions in a Bloomberg survey. January’s deficit was revised to C$337 million from an initially reported C$177 million, Statistics Canada said today in Ottawa.
Canadian exporters may benefit this year from a weaker currency and quicker economic growth in the U.S. Three-quarters of Canada’s exports were shipped to the U.S. in 2013, while the Canadian currency weakened 6.4 percent against the dollar over the last six months through yesterday.
“Canada is counting on stronger momentum in the U.S. economy to drive export growth higher, and February’s trade data indicates that this continues to play out,” Toronto-Dominion Bank economist Leslie Preston wrote in a client note.
Canada’s dollar rose 0.2 percent to C$1.1008 per U.S. dollar at 10:32 a.m. in Toronto. One Canadian dollar buys 90.84 U.S. cents.
Exports rose 3.6 percent to C$42.3 billion in February, Statistics Canada said. Shipments of energy rose 4.3 percent to C$11.2 billion, boosting the increase over the 12 prior months to 21.5 percent. Motor vehicle and parts exports jumped 9.7 percent to C$5.71 billion after extended holiday shutdowns in January triggered an 11.3 percent decline.
Next month’s report for March will show a disruption from a strike at Canada’s largest port in Vancouver, said Derek Holt, Scotiabank’s vice-president of economics in Toronto.
“Canada is going to get crushed on the next round of trade data because of the long strike at Vancouver’s port,” Holt wrote in a client note. “We will be stuck with volatile trade figures for a while yet that will be difficult to decipher.”
The February surplus is just the third in the last 26 months, and smaller than the C$4.8 billion monthly average recorded from 2000 through 2007. Bank of Canada Governor Stephen Poloz has said there are few signs of a needed rotation of demand away from debt-fueled consumer spending to business investment, and economists predict he will keep his benchmark interest rate at 1 percent through this year.
Statistics Canada also said that February imports rose 2.1 percent to a record C$42.1 billion.
The volume of exports advanced 2.2 percent and import volumes rose 0.6 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. widened to C$4.34 billion in February from C$3.85 billion a month earlier.
“There remains some uncertainty about the growth in our Canadian economy for 2014,” Trimac Transportation Ltd. Chief Operating Officer Edward Malysa said on a March 10 earnings call. The Calgary-based bulk trucking company may benefit from a weaker Canadian dollar that helps exports, he said.
Statistics Canada also provided a review of last year’s trade balance, saying the shortfall narrowed to C$6.8 billion in 2013 from the record C$12 billion in 2012. Exports rose 3.7 percent last year and imports gained 2.6 percent. Total trade of C$967 billion was equivalent to 51.4 percent of the country’s gross domestic product.