Canada's Trade Deficit Unexpectedly Widens

Canada's trade deficit widened more than expected in September to the second-highest level on record, as import prices rose amid declining exports.

The trade deficit was C$2.49 billion (US$2.47 billion), up from C$1.49 billion in August, revised from the originally estimated C$1.35 billion, Statistics Canada said. The trade deficit in July was a record-high C$2.51 billion.

The market had expected the deficit to grow to C$1.6 billion in September.

The overall value of exports fell 1.7% to C$33.07 billion from C$33.65 billion in August, as prices rose 0.5% and volumes dropped 2.2%, StatsCan said.

At the same time, the value of imports rose 1.2% to C$35.55 billion, the highest level since November 2008, with prices rising 1.1%.

The trade deficit for all of the quarter surged to a record C$6.5 billion, nearly triple the second quarter's deficit, BMO economists said. That will widen Canada's current account deficit even further.

Exports of automotive products fell 6.6% to C$4.77 billion, the fourth consecutive decline, led by a 10.9% decline in passenger car exports.

Other consumer goods exports fell 15.9% to C$1.36 billion, following a 27.3% gain in August, on fewer exports of medicinal and pharmaceutical products.

Exports of industrial goods and materials fell 2.3% to C$7.82 billion on lower volumes, with gains in nickel and alloy exports offset by declines in precious metals and copper ores.

Meanwhile, imports of industrial goods and materials rose 5.6% to C$7.56 billion, led by metals and metal ores, including record-high imports of precious metals, up 38.6% to C$1.0 billion.

Machinery and equipment imports rose 3.2% to C$10.21 billion led by aircraft, engines and parts, while automotive parts imports fell 4.8% to C$5.50 billion.

Canada's trade surplus with the U.S., the country's largest trading partner, narrowed to C$1.6 billion from C$2.9 billion in August, on lower exports of passenger cars.

Exports to countries other than the U.S. rose 3.6% as imports rose 0.5%, reducing the nation's trade deficit outside the U.S. to C$4.1 billion from C$4.3 billion.

Canada, WSJ
11/11/2010 4:48:51 AM