Canada December Trade Surplus Widens Unexpectedly (Update1)
By Alexandre Deslongchamps
Feb. 13 (Bloomberg) -- Canada's trade surplus widened unexpectedly in December to the largest since February, as exports of cars and energy products gained.
The surplus widened for a second-straight month to C$4.98 billion ($4.24 billion), from a revised C$4.72 billion in November, Statistics Canada said today in Ottawa. Exports rose 3.8 percent to C$40.4 billion, and imports gained 3.6 percent to C$35.4 billion.
The wider trade surplus, combined with January employment data that showed almost seven times more new jobs than economists had forecast, suggest Canada's economy rebounded after slowing in the second and third quarters. The country's currency has fallen since touching a 28-year high in May, helping factory exports abroad and reducing the need for the Bank of Canada to lower interest rates.
Economists forecast the December trade surplus to come in at C$4.7 billion, according to the median of 23 estimates in a Bloomberg News survey.
The Canadian dollar rose to 85.46 U.S. cents at 8:51 a.m. in Toronto. The currency gained the most in seven months on Feb. 9 after the employment report, reaching 85.30 U.S. cents.
The U.S. trade deficit widened more than expected in December, rising 5.3 percent to $61.2 billion on higher prices for crude oil imports, the Commerce Department said today in Washington.
Bank of Canada
The Bank of Canada predicted last month the economy would expand 2.4 percent in the first quarter and 2.6 percent in the second quarter, after slowing to a 1.5 percent annualized rate in the fourth quarter. Should that scenario bear out, the central bank won't need to cut interest rates to boost demand, Bank of Canada Deputy Governor David Longworth said Feb. 6.
A majority of 12 economists surveyed by Bloomberg News between Jan. 31 and Feb. 8 see the bank's forecast as too optimistic and predict a fourth-quarter rate cut.
For 2006, the size of the trade surplus shrank C$11.2 billion to C$53.6 billion, the smallest annual surplus since 1999, the statistics agency said.
Canadian employers added 88,900 jobs in January, Statistics Canada said Feb. 9.
The trade surplus with the U.S., which buys about 75 percent of Canada's exports, widened to C$7.92 billion, from November's C$7.48 billion, the statistics agency said today.
Autos, Energy
Carmakers' sales abroad rose 8.4 percent to C$7.54 billion, the third-straight gain, the statistics agency said.
Canadian energy exports increased 5.8 percent to C$7.28 billion during the month, led by natural gas. Canada sits on the largest oil reserves outside the Middle East and is the world's No. 2 exporter of natural gas.
Exports of machinery and equipment rose 2 percent to C$8.75 billion and those of consumer goods other than cars surged 9.2 percent to C$1.79 billion. Exporters have benefited as the Canadian dollar fell almost 7 percent since touching 91.44 U.S. cents on May 31.
Cars and energy products such as crude oil and heating and diesel fuel led the imports' gain. Energy imports advanced 7.9 percent increase to C$2.95 billion and cars imports rose 6.5 percent to C$7.13 billion.
Excluding the effects of price changes, exports rose 2.5 percent during the month, and imports gained 2.1 percent, the statistics agency said.
To contact the reporter on this story: Alexandre Deslongchamps in Ottawa at adeslongcham@bloomberg.net .
Last Updated: February 13, 2007 08:52 EST
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