- Savanth Sebastian, economist at Commsec
Canada's trade deficit shrank more than expected in January, as stabilizing energy prices offset a broad fall in export volume. The trade gap contracted to C$984 million after a revised January shortfall of C$1.48 billion, Statistics Canada reported. Total exports rose 0.4%, as prices increased 3.9% while volume dropped 3.3%, the biggest in 19 months. Energy exports soared 14.9% to C$8.78 billion, including a 45.1% surge of natural gas and a 9.3% rise of crude oil and bitumen. Prices skyrocketed 17.5%, whereas volumes dropped by 2.3%. Imports declined 0.7%, with volumes falling 1.7% and prices rising 1.1%. The surplus with the US, Canada's top trading partner, widened to C$2.95 billion in February from C$2.24 billion in the preceding month. Exports account for about one-third of Canada's economic output, with about 75% of the shipments going to the world's number one economy. Economists warned that the unusually harsh winter weather in February constrained Canada-US trade, in both directions. On top of that, a US port strike might also have been a significant factor. The data comes after BoC Governor Stephen Poloz's speech in London last week, where he defended the central bank's January decision to cut rates and warned of a major slowdown in during the first quarter. The Governor said that Q1 growth would be much lower than the 1.5% estimated in January's Monetary Policy Report, largely due to the oil price shock and bad weather.
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