OTTAWA – Canada's trade deficit narrowed in July from the previous month, as exports declined steeply for a second straight month and imports fell by the most in over eight years.
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Canada's merchandise trade deficit in July came in at a seasonally adjusted 3.04 billion Canadian dollars ($2.46 billion), Statistics Canada said Wednesday, compared with a revised C$3.76 billion shortfall in the previous month.
Markets were anticipating a C$3.35 billion trade shortfall in July, according to economists at Royal Bank of Canada.
Canada's monthly trade data covers the export and import of goods and doesn't include services.
In July, exports declined 4.9% to C$44.14 billion, compared with the previous month's 5% drop. On a one-year basis, exports rose 2.2%.
Imports declined 6% to C$47.18 billion, or the biggest monthly decline in imports since January 2009, when imports dropped 8.9%.
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In volume, or price-adjusted terms, exports in July were down 1.1%, while imports declined 2.3%.
Exports helped drive robust growth in Canada in the second quarter. Data measuring the country's gross domestic product suggested exports grew at an annualized rate of 9.6% in the April-to-June period, the fastest pace of expansion in three years.
Trade, especially to the U.S., represents a significant source of growth for the Canadian economy. Sales of goods and services to the U.S. represented roughly 23% of total Canadian output, according to data collected by BMO Capital Markets.
"Prices did play a significant role, but weaker volumes also contributed and point to a slowdown in growth in the third quarter," said Royce Mendes, an economist at CIBC World Markets. "Declines in key manufacturing areas, namely autos, suggest a weak monthly report for that sector and as a result the monthly GDP result as well."
In July, Canadian exports to the U.S. fell 3.2%, mainly on a decline in trade activity of passenger cars and light trucks. Meanwhile, Canadian imports of goods from the U.S. declined 6.7%.
Overall, Canadian exports fell due to declines in motor vehicles and other transportation equipment activity. Nonenergy exports were down 5.2% in the month. Meanwhile, imports dropped 6% in July after seven straight monthly increases, with declines reported in all commodity sections.
David George-Cosh contributed to this article.
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(END) Dow Jones Newswires
September 06, 2017 09:41 ET (13:41 GMT)