MNI 5 THINGS:Canada Goods Trade Gap Smaller Than Expected>

--But Underlying Details Disappoint

By Yali N'Diaye

     OTTAWA (MNI) - The following are the key points from the January 

data on the Canadian merchandise trade data released Wednesday by 

Statistics Canada: 

     - The goods trade deficit narrowed to C$1.9 billion from C$3.1 

billion in December, while analysts in a MNI survey had expected a C$2.3 

billion deficit. 

     - Underlying details, however, were disappointing and are likely to 

reinforce the Bank of Canada's cautious approach as they challenge the 

scenario of a growth rotation where exports and investment play a bigger 

role while household spending slows. 

     - Exports fell 2.1% to C$45.8 billion, with volumes down 3.6%, the 

largest drop in three years. Excluding a 2.9% gain in energy, exports 

fell 3.2%. Overall, 7 of 11 categories posted declines, showing the 

widespread nature of the weakness. 

     --Regionally, exports to the U.S. fell 2.9% after edging down 0.4% 

in December, mostly on lower passenger cars. Exports to non-US countries 

edged up 0.4% while imports fell 8.5%. 

     - Imports data brought discouraging news on the investment front. 

Overall imports fell 4.3%, with volumes down 3.9%, the largest drop 

since October 2016. In particular, sales of industrial machinery and 

equipment - an investment-related import - fell 11.3%. However, imports 

in this category were boosted in the previous two months in anticipation 

of new regulations in effect since January 2018. So data from February 

will have to be monitored to see whether January was just the reversal 

of December-November. 

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

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