Analysis: Canada August Trade Gap Widens On Weak Exports>

By Yali N'Diaye

     OTTAWA (MNI) - Against market expectations, Canada's trade deficit 

widened in August, reaching C$3.4 billion, as exports weakened further 

amid the ongoing appreciation of the Canadian dollar, data from 

Statistics Canada showed Thursday. 

     Analysts in a MNI survey had expected the deficit to narrow to 

C$2.8 billion. 

     August deterioration was mainly an export story - although exports 

rose in 6 of 11 categories - with a 1.0% drop on the month to C$43.6 

billion, the lowest level since September 2016. As a result, exports 

edged down 0.2% on the year, marking the first 12-month decline since 

September last year. 

     Imports, on the other hand, were flat at C$47.0 billion, as a 

result of divergent trends. 

     The overall picture was not encouraging and could feed the Bank of 

Canada's concern over the impact of the Canadian dollar appreciation. In 

August, the loonie gained 0.5 US cents against the greenback. It is 

unclear, however, what part the exchange rate played in the weakening 

exports. 

     Besides, looking at volumes alone, exports dropped 1.9%, following 

declines of 1.2% in July and 2.2% in June. This is the first time since 

2011 that real exports decreased for three consecutive months. 

     With real imports edging up just 0.2%, the real trade deficit 

widened to C$1.3 billion from C$0.4 billion. 

     Regionally, August report was also disappointing, with exports to 

the U.S., Canada's main trading partner, down 1.8%, which marked the 

third consecutive decrease. 

     The surplus with the U.S. narrowed to C$2.3 billion in August from 

C$3.2 billion in July. 

     On the other hand, the trade deficit with non-US countries declined 

to C$5.7 billion from C$6.2 billion. 

     By sector, the weakness in exports was led by consumer goods 

(-3.8%), basic and industrial chemical, plastic and rubber products 

(-5.9%), and metal ores and non0metallic minerals (-9.7%). 

     Without a 1.5% gain in energy, exports would be down 1.4%. 

--MNI Ottawa Bureau; yali.ndiaye@marketnews.com 

[TOPICS: MACDS$,M$C$$$]