By Robb M. Stewart
OTTAWA--Canada's goods-trade surplus with the rest of the world widened more than expected in February as record gold shipments helped drive the strongest export growth in six months.
The country posted a merchandise-trade surplus of 1.39 billion Canadian dollars, the equivalent of about $1.03 billion, Statistics Canada said Thursday. It marked a second monthly surplus in a row and topped the C$675 million expected by economists.
January's surplus was revised up by $112 million to $608 million, a reversal from a C$400 million deficit in the final month of last year
Merchandise exports jumped 5.8% to C$66.62 billion in the latest month, outpacing the 4.6% advance in imports to C$65.23 billion, the highest level since last June, the data agency said.
The strength in both imports and exports is a positive signal for industry-level gross domestic product, which Statistics Canada has estimated expanded 0.4% in February from the prior month following stronger-than-expected growth of 0.6% in January. Previously released data from the agency points to a further strengthening in factory trade and wholesale sales in February.
Stephen Brown, deputy chief North America economist at Capital Economics, said net trade looks to have made the bulk of the contribution to an anticipated acceleration in GDP growth for Canada, which he estimates at 2.5% in the first quarter of the year against roughly 1% annualized the prior quarter.
While exports were up in nine of the 11 product categories tracked, more than half of the growth in February was driven by exports of unwrought gold, including high-value shipments of refined gold and transfers of assets in the banking sector in a month when the bullion price was up sharply. Statistics Canada said that excluding the precious metal, exports were up 2.8% on the month before.
On a price-adjusted basis, overall exports climbed 6.2% for the month, suggesting strong growth in export volumes.
Exports of farm, fishing and intermediate food products was up 9.7%, the steepest increase since July, thanks in part to a rebound in wheat shipments. Exports of motor vehicles and parts also increased, though levels are still below the highs of October and November as retooling at some plants continued to limit vehicle production in the country.
On the imports side, purchases from abroad recovered from January's drop with all segments recording growth except for metal and non-metallic mineral products. In volume terms, total imports increased 4.1% on-month in February.
Exports to the U.S., Canada's biggest export market by a wide margin, climbed 3.3%, while imports increased 3.4%. That widened Canada's surplus with its neighbor slightly to C$9.08 billion from $8.82 billion the month before.
Exports to countries other than the U.S. jumped 14.2% in February, thanks mainly to shipments of unwrought gold to Switzerland and the U.K., the agency said. Imports from countries other than the U.S. were up 6.7%, with the largest increases seen in various products from China, aircraft from the U.K., scrap and non-ferrous metals from Indonesia and cars and light trucks from South Korea.
When international trade in goods and international trade in services were combined, Canadian exports rose 5.0%, while imports increased 3.7%. As a result, Canada's trade surplus incorporating both goods and services swung to C$367 million surplus from C$595 million deficit in January.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
04-04-24 0933ET
