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Canadian Trade Gap Unexpectedly Narrows on Farm Export Surge

Dec. 11 (Bloomberg) -- Canada’s merchandise trade deficit unexpectedly narrowed in October as imports fell and exports of agricultural goods surged.

Canada recorded a C$169 million ($171 million) trade deficit in October, down from a revised C$1.01 billion gap in September, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg had forecast a C$1.2 billion deficit, based on the median of 21 responses.

The figures mark a third straight narrowing of the trade deficit since the country posted a record C$2.71 billion shortfall in July. Weak global demand and a strong Canadian dollar, boosted in part by the country’s reputation as a haven for investors, have led to trade deficits and prompted Bank of Canada Governor Mark Carney to damp expectations for interest rate increases.

The country has run trade deficits in 36 of the past 47 months, after a string of more than 30 years of consecutive monthly surpluses.

Carney said in October that interest-rate increases are “less imminent” due to risks to economic growth, including moderate global demand and record domestic debt burdens.

Exports rose 1 percent in October to C$38.1 billion, led by an 18 percent gain in farm and food products. Energy exports rose 3 percent, gaining for a third consecutive month as prices increased. Exports of crude and bitumen, which have declined 2.5 percent from a year earlier, rose 5 percent in October.

Imports fell 1.2 percent to C$38.3 billion in October, led by a 39 percent drop in petroleum refinery products.

The volume of exports, which exclude price changes, increased 0.3 percent in October while import volumes fell 1.8 percent.

Canada’s trade surplus with the U.S. narrowed to C$2.77 billion in October from C$3.21 billion a month earlier.

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