Auto sales help trim November trade gap

Gains in non-energy exports narrow monthly deficit in line with Poloz predictions

Canada’s merchandise trade deficit was narrower than economists forecast in November, with shipments of automobiles and metals leading the first export gain in four months.

The deficit of $1.99 billion followed an October shortfall that was pared to $2.49 billion from the initial reading of $2.76 billion, Statistics Canada said Wednesday in Ottawa.

Economists surveyed by Bloomberg forecast a November deficit of $2.6 billion, based on the median of 15 estimates.

Exports climbed 0.4 per cent to $43.3 billion following three prior declines. Sales of motor vehicles and parts rose 5.9 per cent to $7.94 billion, followed by a 20.4-per-cent jump in metals ores and non-metallic minerals to $1.77 billion, and a 5.5-per-cent gain in forestry products and packaging materials to $3.45 billion.

The gains in non-energy exports are what Bank of Canada Governor Stephen Poloz is counting on to drive a recovery and fulfil his prediction that the economy will return to full output by mid-2017.

Falling energy sales and investment led him to cut interest rates twice last year, and crude prices now at about $36 are pressuring him to act again.

The November report does little to undo what was a year of woe for Canada’s exporters.

The deficit for January to November of $22.8 billion shatters the previous comparable record of $12.9 billion set in 2012.

The main culprit has been a drop in prices for exported energy. Energy shipments fell 6.6 per cent in November to $5.92 billion, capping a slide of 40.4 per cent over the prior 12 months.

The Canadian dollar fell to a12-year low Tuesday and traders started pricing in more than a 40-per-cent chance of a rate cut by May, up from the 31-per-cent probability seen on Dec. 31, amid signs of economic weakness in China and further declines in the price of oil.