The Canadian Press - ONLINE EDITION

Canadian economy headed in right direction as exports provide welcome boost

  • Print

OTTAWA - Canadian exports to foreign markets surged by a surprisingly robust 3.5 per cent in May, narrowing the country's trade deficit and setting the economy on a more sustainable growth path.

For contribution to economic output, the Statistics Canada report was even more encouraging as volumes increased by an even bigger 4.2 per cent, as price drops shaved 0.7 per cent from the value of shipments.

The May data on one of Canada's most important economic indicators was stronger than economists' consensus forecast, but in line with what analysts had been anticipating would be the next stage of Canada's economic recovery, with exports and business investment replacing housing as drivers of growth.

Imports also rose in May, although by a smaller 1.6 per cent, bringing Canada's trade deficit to a slim $152 million from an upwardly revised $961 million in April.

"The export-driven recovery in the trade balance in May supports our expectation that net trade will provide a lift to growth in the second quarter even after accounting for the unexpectedly large deficit recorded in April," said Dawn Desjardins, assistant chief economist with the Royal Bank, in a note to clients.

"Additionally, the increases in imports were in part due to higher equipment purchases that likely signal a strengthening in investment growth," she said.

With the housing market and construction slowing, the Bank of Canada has been counting on an export recovery to boost business confidence and convince firms they need to invest in new equipment and machinery to expand production capacity.

On that front, there was more good news from the U.S. — Canadian exporters' largest market by far — with the American economy creating 288,000 new jobs in June, and exports receiving a boost there as well.

Markets saw the developments on both sides of the border as supportive for growth, lifting the Canadian dollar about a third of a cent to slightly above 94 cents US, one of the higher levels in several months.

"Economists, ourselves included, have been bemoaning the lack of export-led growth in Canada," said TD Bank economist Leslie Preston.

"However, Canada's trade position has been steadily improving since its post-recession low in mid-2012 (and we) expect Canada's export sector to continue to accelerate through the second half of the year in line with the U.S. economy."

Preston noted that Canada's exports are now 12.7 per cent higher than a year ago, a pace that hasn't been seen since the end of 2011.

The May trade data was strong in the composition as well as the bottom line, with a key contribution from the auto industries (plus 9.8 per cent) as well as the usually reliable energy sector, which rose 3.4 per cent.

As well, exports in consumer goods rose 4.4 per cent, and food products rose 10.5 per cent.

Overall, export values rose to $44.2 billion in May, while imports increased to $44.3 billion.

Exports to the United States rose 2.1 per cent $33.5 billion, while imports slipped 0.2 per cent to $28.7 billion, raising the trade surplus with the U.S. to $4.8 billion from $4 billion in April.

Exports to countries other than the United States grew 8.3 per cent to $10.7 billion, while imports from those countries rose 5.1 per cent to $15.6 billion, narrow that trade deficit to $4.9 billion from $5 billion in April.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Key of Bart - Evil Las Vegas

View more like this

Photo Store Gallery

  • STDUP ‚Äì Beautiful West End  begins it's summer of bloom with boulevard s, front yards  and even back lane gardens ,  coming alive with flowers , daisies and poppies  dress up a backyard lane on Camden St near Wolseley Ave  KEN GIGLIOTTI  / WINNIPEG FREE PRESS  /  June 26 2012
  • A Canada goose protects her nest full of eggs Monday on campus at the University of Manitoba- Standup photo- Apr 30, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Should panhandling at intersections be banned?

View Results

View Related Story

Ads by Google