Newspaper article The Canadian Press

Canadian Trade Deficit Doubles in June as Global Slowdown Hits Economy

Newspaper article The Canadian Press

Canadian Trade Deficit Doubles in June as Global Slowdown Hits Economy

Article excerpt

Canadian trade deficit widens in June


OTTAWA - Canada's trade performance with the rest of the world worsened for the third consecutive month in June, providing fresh evidence of the global economic slowdown's impact on the country's key sector.

Statistics Canada reported Thursday the merchandise trade deficit nearly doubled to $1.8 billion during the month, from an upwardly revised $954 million in May.

It was the third consecutive report showing a widening gap and represented the worst monthly deficit in almost two years.

Although the bottom line was nearly twice economists' expectations, analysts noted the picture was not as dark as the bottom line suggests as the deficit was entirely on the import side, which saw a 2.3 per cent gain.

Exports were mildly positive, growing 0.2 per cent, and were even stronger in volume terms, rising 1.1 per cent, as soft oil prices cut into the return on shipments. However, all the gain came from one sector -- autos -- which stamped out a five-year best 13.9 per cent increase in June.

Some economists took comfort in the increase in export volumes, saying it suggests the economy is holding up well in the face of stiff winds from the rest of the world. Even the imports bump could point to increased domestic activity, said David Madani of Capital Economics.

They were also encouraged by the record high level of imports of machinery and equipment at $11.2 billion, reflecting a long-awaited ramp up of business investment that could pay dividends down the road in improved competitiveness.

Still, Bank of Montreal economist Doug Porter said it was difficult to see trade as anything but a negative this quarter and going forward.

For the three-month period ending June, Canada's trade deficit totalled $3.3 billion, versus a $2.2 surplus in the first quarter.

"Net trade will likely cut roughly 1. …

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