After a tough Q2 for Canada's economy "July's data took a big step back in the right direction,'' said Avery Shenfeld of CIBC Capital Markets
OTTAWA—Statistics Canada says the country’s trade deficit narrowed in July to $2.5 billion in what could be a sign that the economy is poised for a rebound.
The agency says the trade deficit was down from the previous month, which had a revised shortfall of $4 billion compared with an initial reading of $3.6 billion, as exports grew and imports fell.
Economists had expected a deficit of $3.25 billion for July, according to Thomson Reuters.
Canadian exports increased 3.4 per cent to $42.7 billion in July as volumes gained 3.7 per cent, but prices fell 0.3 per cent.
Nine of 11 sectors posted gains, boosted by non-energy exports.
Excluding energy products, exports were up 4.1 per cent.
“Trade was a sore spot for Canada in Q2, but July’s data took a big step back in the right direction,” Avery Shenfeld of CIBC Capital Markets said in a research note.
“The trade deficit still looms wide at $2.5 billion after hitting a record $4 billion in June, and we’ll need more support from oil prices to make much headway, but in terms of real GDP, trade should be a big part of the rebound from a negative Q2 to a healthy Q3.”
Imports dropped 0.1 per cent to $45.2 billion as volumes fell 1.2 per cent and prices gained 1.1 per cent. The overall drop came despite growth in six of the 11 sectors tracked.
Exports to the United States increased 3.3 per cent to $32.5 billion while imports fell 0.5 per cent to $29.9 billion to put Canada’s trade surplus with its largest trading partner at $2.6 billion in July.
Exports to countries other than the U.S. rose 3.9 per cent to $10.2 billion in July, while imports were up 0.6 per cent to $15.3 billion in July.
Canada’s trade deficit with countries other than the U.S. was $5.1 billion in July compared with $5.4 billion in June.