Canada posts surprise January trade surplus of C$1.9 billion on export gains

Canada recorded an unexpected trade surplus of C$1.9 billion ($1.38 billion) in January, driven by broad-based gains in exports, while imports posted a smaller increase led by motor vehicles and parts, Statistics Canada data showed on Wednesday

Analysts had forecast a trade deficit of C$60 million in January. Statscan also revised December’s trade figures to a surplus of C$1.2 billion from an initial C$160 million deficit.

The data points to a “stellar” start to the year that should help lift economic prospects at a time when high interest rates are expected slow the domestic economy, Stuart Bergman, chief economist at Export Development Canada, said in an interview.

 “Farm, fishing and intermediate food products, motor vehicles and parts, and metal and non-metallic mineral products all contributed roughly equally to the rise in exports”

The Bank of Canada, which kept rates on hold on Wednesday, has raised rates by a total of 425 basis points over the past year to tame inflation.

Total exports rose 4.2% in January on the back of gains in all product categories that more than offset a fall in energy products exports. Excluding energy, exports rose 6.1% to an all-time high of C$51.6 billion.

Farm, fishing and intermediate food products, motor vehicles and parts, and metal and non-metallic mineral products all contributed roughly equally to the rise in exports, Statscan said. By volume, total exports were up 5.3% in January.

“We saw real gains,” Bergman said, noting the jump in trading volume that made up for a slight drop in prices. “This is pure physical shipments … this is the stuff that we want to see.”

Imports increased 3.1% after two consecutive monthly declines, largely driven by motor vehicles and parts as well as industrial machinery, equipment and parts. Imports of consumer goods also contributed with a 3.8% rise in January after three months of declines. By volume, total imports were up 4.1%.

The Canadian dollar was trading 0.1% lower at 1.3765 to the greenback, or 72.65 U.S. cents, which was near its weakest level in four months.