Exports show strength amid US growth, low Canadian dollar
TORONTO: Canadian exports are finally starting to show signs of a persistent recovery, with analysts cheered by healthy volumes in January that rose sharply thanks to the weak domestic dollar and continued U.S. growth.
Although Statistics Canada said on Friday that the trade deficit had widened to $655-million from $631-million in December, markets paid much more attention to a 3.6 per cent jump in volume. "The long-awaited adjustment to the low dollar (and) firm U.S. consumer finally appears to be well under way, and the strong U.S. jobs data suggests it can continue for some time yet," BMO Capital Markets Chief Economist Doug Porter said in a note to clients.
Analysts in a Reuters poll had predicted a shortfall of $1.05billion. January marked the 17th consecutive monthly trade deficit, reflecting continuing economic damage caused by weak oil prices. The crude slump, though, has helped depress the Canadian dollar and make exports cheaper.
The Bank of Canada, whose next scheduled interest rate announcement is next Wednesday, has been counting on non-oil exports to help offset the sharp pullback in investment in the energy sector caused by crude's slide. The value of exports grew by 1.0 per cent overall to a record $46.00-billion even as prices fell by 2.5 per cent. When energy products were stripped out, the increase in the value of January exports was 2.3 per cent.