OTTAWA -- June saw Canada's trade performance with the rest of the world worsen for the third consecutive month, providing fresh evidence of the global economic slowdown's impact on a key sector.
Statistics Canada reported Thursday the merchandise trade deficit nearly doubled to $1.8 billion during the month, from a revised $954 million in May.
Although the bottom line was nearly twice economists' expectations, analysts noted the picture was not as dark as the bottom line suggests as the deficit was entirely on the import side, which saw a 2.3 per cent gain.
Exports were mildly positive, growing 0.2 per cent, and were stronger in volume terms, up 1.1 per cent. However, all the gain came from one sector -- autos -- which stamped out a five-year best 13.9 per cent increase in June.
Some economists took comfort in the increase in export volumes, saying it suggests the economy is holding up well. The imports bump could point to increased domestic activity, said David Madani of Capital Economics.
They were also encouraged by the record high level of imports of machinery and equipment at $11.2 billion, reflecting a long-awaited ramp up of business investment that could pay dividends in improved competitiveness.
Still, Bank of Montreal economist Doug Porter said it was difficult to see trade as anything but a negative.
For the three-month period ending June, Canada's trade deficit totalled $3.3 billion, versus a $2.2 billion surplus in the first quarter.
"Net trade will likely cut roughly 1.5 percentage points from GDP growth in Q2, prompting us to shave our Q2 estimate of growth by a tenth to 1.7 per cent," he said.
"The good news is that commodity prices have bounced since from their late-June lows .... which should provide some support for Canadian export receipts in coming months." That is if volumes hold up, he added.
In an interview with the BBC aired Thursday, Bank of Canada governor Mark Carney said there is already evidence the global slowdown and European crisis affecting Canada, particularly on the exports front.
"It's had a knock-on effect, commodity prices are down fairly sharply, about 15 per cent over the course of the last several months," he said. "There's an adjustment and a fairly synchronized deceleration of the global economy at the moment."
In June, exports totalled $39.1 billion, while imports hit a record-high $40.9 billion. Imports from the United States grew 3.0 per cent to a record high of $25.9 billion, the third monthly increase in a row. Exports rose 2.2 per cent to $29.0 billion.
Meanwhile, imports from countries other than the U.S. grew 1.1 per cent to $15.0 billion, while exports fell for the third consecutive month, down 5.2 per cent to $10.1 billion in June.
-- The Canadian Press