MNI DATA IMPACT: Canada Trade Gap Shrinks on Export Rebound>

By Greg Quinn and Anahita Alinejad

     Ottawa (MNI) - Canada's trade deficit shrank in August as exports 

rebounded, an improvement that was nullified by revisions showing 

weakness in the prior two months.

     The August shortfall of C$955 million was smaller than the MNI 

economist median of C$1.2 billion. Ottawa-based Statistics Canada also 

raised the July deficit to C$1.4 billion from C$1.1 billion, and the 

June shortfall to C$245 million from C$55 million.

     Exports rebounded with a 1.8% gain in August following a 0.8% 

decline in July. That momentum was also undercut because after stripping 

out short-term price swings the volume of exports declined 0.2%, meaning 

it will make less of a contribution to economic growth. 

     Imports climbed 1.0% in August following July's 1.5% increase. The 

volume of imports was stronger with a 1.2% increase. Imports and exports 

both rose in a majority of industries tracked by StatsCan, suggesting 

resilient two-way trade even amid global trade tensions.

     Canada's economic growth rate is expected to be cut in half from 

the second quarter's 3.7% pace between July and September, with oil 

receipts fading and consumers weighed down by record debt loads. The 

Bank of Canada has resisted a global trend of rate cuts so far this year 

by arguing growth earlier this year has kept the economy close to 

potential and inflation at its 2% target.      

     That strong growth powered earlier this year by exports may 

be fading. Shipments abroad are now down 0.2% from a year 

earlier, while exports are up 0.9%. 

     Exports were boosted in August by aircraft shipments, which 

have been volatile in recent months, and by higher crude oil 

prices as production volumes declined. Imports rose as supply 

disruptions in Eastern Canada boosted shipments of oil, and by shipments 

of gold, a product Canada often exports to the rest of the world.  

--MNI Ottawa Bureau; +1-613-314-9647; greg.quinn@marketnews.com

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