Canadian Trade Deficit Jumps to $1.9 Billion

Canada’s trade balance took a sharp turn for the worse in February, as the recently high-flying exports were knocked back down to earth by a sluggish U.S. economy.

Statistics Canada reported that the Canadian trade deficit swelled to $1.9-billion in February, the biggest in four months and triple the size of January’s $628-million shortfall. Exports tumbled 5.4 per cent, on a combination of lower prices and a 2.2-per-cent drop in volumes. Imports also declined by 2.6 per cent, again on lower prices as well as a volume drop of 1.2 per cent, suggesting that demand at home was weak in the month, too.

Economists had expected some deterioration in the trade numbers in February, after three straight months of strong export gains that had helped slash more than $1.6-billion off the deficit, as U.S. economic data had indicated that activity south of the border had hit a soft patch. But the drop in exports was much more dramatic than they had anticipated. As a result, the February deficit was roughly double what economists, on average, had predicted.

Statscan said the export slump was driven by sharp declines in consumer goods, energy products and the auto sector. Exports to the U.S. market, which accounts for three-quarters of Canada’s exports, were down 5.6 per cent in the month.

via The Globe and Mail

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza