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Bearish Focus

By Greg Quinn
     Ottawa (MNI) - Canada fell back into trade deficits as imports 
rebounded while exports declined for a second month. 
     The July deficit of C$1.12 billion exceeded the MNI median of C$200 
million, and Statistics Canada also flipped the June figure to a C$55 
million deficit from an initial C$136 million surplus. The damage even 
went back to May, with another revision shrinking the surplus for that 
month to C$470 million from C$556 million. 
     Imports climbed 1.2% in July following a 4% drop in June, with the 
rebound led by pharmaceuticals brought in from Switzerland and Germany. 
Imports of rail cars to transport crude oil also grew, along with ores 
used in aluminum plants after some temporary shutdowns.
     Exports fell 0.9% after a 5% decline in June. Energy products fell 
by 6.7% on lower crude oil prices, while non-energy products advanced by 
0.5%, Statistics Canada said.
     Canada's trade balance with the U.S. narrowed to C$4.6 billion in 
July from C$5.5 billion in June. 
     The report is more in line with signs that a global trade war is 
beginning to disrupt supply chains, following signs earlier this year 
that Canadian exporters were shrugging off threats from the U.S. and 
China. Strength in foreign trade was the main reason Canada reported 
a faster-than-expected growth annualized growth rate of 3.7% in the 
second quarter last Friday, and today's figures suggest that momentum 
won't last. 
     In a separate reoprt, Statistics Canada said labor productivity 
rose 0.2% in the second quarter from the first, and by 0.3% from a year 
earlier. Productivity measures how much a typical worker can produce in 
a given period of time. 
--MNI Ottawa Bureau; +1-613-314-9647;