OTTAWA – Canadian exports are finally starting to show indications of a persistent recovery, with analysts cheered by healthy volumes in January that rose sharply thanks to the weak domestic dollar and continued U.S. growth.
Although Statistics Canada said on Friday that the trade deficit had widened to $655 million from $631 million in December, markets paid much more focus on a 3.6 per cent begin volume.
“The long-awaited adjustment towards the low dollar (and) firm U.S. consumer finally seems to be well arrived, and also the strong U.S. jobs data suggests it can continue for a while yet,” BMO Capital Markets Chief Economist Doug Porter said inside a note to clients.
Analysts in a Reuters poll had predicted a shortfall of $1.05 billion. January marked the 17th consecutive monthly trade deficit, reflecting continuing economic damage brought on by weak oil prices.
The crude slump, though, has helped depress the Canadian dollar and make exports cheaper.
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The Bank of Canada, whose next scheduled rate of interest announcement is next Wednesday, has been relying on non-oil exports to help offset the sharp pullback in purchase of the energy sector brought on by crude’s slide.
The worth of exports grew by 1.0 percent overall to some record $46.00 billion even while prices fell by 2.5 per cent. When energy products were stripped out, the increase in the need for January exports was 2.3 per cent.
“A very, quite strong month, the third one in a row … it’s given us fantastic momentum going into this season,” Export Development Canada Chief Economist Peter Hall said inside a phone interview.
Imports climbed 1.1 per cent to $46.65 billion as nine of 11 sections increased. Volumes expanded by 1.6 per cent while prices fell 0.5 per cent.
The Canadian dollar firmed around the data, touching $1.3392 towards the U.S. dollar, or 74.67 U.S. cents, from $1.3416, or 74.54 U.S. cents.
Exports towards the United States, which accounted for 76 percent of Canada’s global total in January, increased by 2.6 % while imports grew by 1.1 percent.
As a result, Canada’s trade surplus using the Usa grew to $3.70 billion from $3.13 billion in December.
Separately, Statscan said the labour productivity of Canadian businesses grew by just 0.1 percent in the fourth quarter of 2015, down from 0.4 per cent within the third quarter.
? Thomson Reuters 2016
