The deficit of C$503 million ($487 million) was the largest in eight months, Statistics Canada said. The agency also reduced its trade balance estimates back through January.
Trade will shave 0.8 percentage point from Canada’s economic growth rate this year, the Bank of Canada said in April, leaving the overall expansion at 3.7 percent. Canada’s trade balance has averaged a deficit of about C$250 million since the start of last year, after the surplus peaked at C$5.7 billion in May 2008 before a global recession eroded shipments of automobiles, lumber and energy.
Imports rose 5.7 percent to C$35 billion in May, Statistics Canada said today. Machinery and equipment imports rose 6.6 percent to C$9.38 billion, and industrial goods and materials imports gained 6.8 percent to C$7.3 billion. The volume of imports rose 4.2 percent while prices grew 1.4 percent, the report said.
Exports rose 5.2 percent to C$34.5 billion, with volumes rising 3.9 percent and prices increasing 1.2 percent. More than half of May’s gain came from a 21 percent jump in automotive product shipments to C$5.43 billion. Within the autos category, passenger vehicle shipments rose 28 percent to C$3.7 billion, the highest since December 2006, on the popularity of some models manufactured in Canada,” the agency’s report said.
Canada’s trade surplus with the U.S., its largest trade partner, widened to C$3.59 billion in May from C$3.46 billion the prior month.
Statistics Canada today also changed its estimate of the April trade balance to a deficit of C$330 million from the originally reported surplus of C$175 million.
Canada’s dollar has strengthened 12 percent against the U.S. dollar over the past year. A stronger currency can make the country’s goods less competitive abroad.