Canada’s Trade Gap Unexpectedly Widens Ahead of Rate Decision

(Bloomberg) --

Canada’s trade deficit widened more than expected as energy shipments abroad declined for a second month, a sign recent export strength could be fading.

The nation’s merchandise trade gap hit C$1.12 billion ($840,000 million) in July, Statistics Canada said Wednesday from Ottawa. Economists surveyed by Bloomberg were expecting a deficit of C$350 million.

Exports fell 0.9%, led lower by a 6.7% decline in energy shipments. Crude oil exports pulled back 7.7%. And stripping away price effects, exports edged down 0.1% on the month.

While economic growth in Canada led the Group of Seven in the second quarter, the expansion was driven primarily by a rebound in oil exports after a half year of dismal growth. Rising global uncertainty amid the escalating trade war between the U.S. and China threatens the northern nation’s export prospects, a topic likely to be addressed by the Bank of Canada at its rate decision later Wednesday morning.

Canada’s Trade Gap Unexpectedly Widens Ahead of Rate Decision

Canada’s trade surplus with the U.S., its largest trading partner, narrowed to C$4.6 billion in July, as exports declined 1.1%. Exports to China fell 15.5% amid a lingering diplomatic dispute stemming from Canada’s arrest of a top Huawei Technologies Co. Ltd. executive on an American extradition request.

On the import side, puchases from abroad rose 1.2%, led by consumer goods. Volumes were up by 2.3% -- the largest increase since last March. While that underlying strength in imports has the potential to drag on gross domestic product in the third quarter, it could also be a sign of firming domestic demand.

June’s trade balance was revised to a deficit C$55 million, after an initially reported surplus of C$136 million, the statistics agency said.

©2019 Bloomberg L.P.

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