Canada posts smaller than expected trade deficit in July

OTTAWA (Reuters) – Canada’s trade deficit with the world narrowed to C$987 million ($722.97 million) in July, as imports were dragged lower by a west coast port strike while exports rose slightly, Statistics Canada said on Wednesday.

Analysts in a Reuters poll had forecast a C$3.65 billion deficit in July. June’s deficit was revised to C$4.92 billion – the third largest on record – from a C$3.73 billion shortfall initially reported.

Both exports and imports in July were impacted by a 13-day dock workers strike in British Columbia that disrupted operations at two of Canada’s three busiest ports. Statscan said that trade may also be affected in the coming months as freight backlogs continue to be cleared.

Total imports decreased 5.4% in July, the strongest percentage decline since January 2022. Imports were dragged lower largely due to declines in unwrought gold as well as the combined decreases of product categories, such as consumer goods and electronics, that rely on British Columbia ports.

By volume, imports were down 4.3%.

Total exports rose 0.7% in July, as higher exports of canola, aircraft and other transportation equipment and parts helped to offset the impact of the strike, Statscan said. By volume, exports fell 0.2%.

The Bank of Canada on Wednesday is expected to keep rates on hold at a 22-year high of 5% after the economy unexpectedly shrank in the second quarter, analysts said.

Slowing trade was among factors in an unexpected economic contraction in the quarter ended in June and month-over-month GDP was most likely flat in July, data showed last week.

($1 = 1.3652 Canadian dollars)

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