OTTAWA – Plunging oil prices took a bite out of the value of Canada’s exports as the country posted a trade deficit of $2.5 billion for January, the largest trade deficit since July 2012.
The deficit came as Statistics Canada also revised its initial estimate for the December deficit to $1.2 billion from its earlier reading of a deficit of $649 million.
Economists had expected a January deficit of $1 billion, according to Thomson Reuters.
Bank of Montreal senior economist Benjamin Reitzes said the second-largest trade deficit on record highlighted the negative economic impact of the drop in oil prices.
“Energy prices retraced some losses in February, so this could be as bad as it gets for trade,” Reitzes wrote in a note to clients.
“And, while the volume figures suggest trade could be a drag on Q1 GDP (though it’s still very early), the big gains in industrial and electronic equipment imports could mean that investment may not be quite as weak as feared.”
The price of oil dipped below US$46 a barrel in late January, but has since traded slightly higher around the US$50-a-barrel mark.
Statistics Canada said the deficit increased as exports fell 2.8 per cent in January while imports were largely unchanged from December.
Export prices fell 1.5 per cent because of lower energy prices, while volumes were down 1.3 per cent. Import prices rose 0.1 per cent and volumes were down 0.1 per cent.
Imports from the United States were down 0.1 per cent to $30.5 billion in January, while exports fell 3.1 per cent to $31.8 billion, narrowing Canada’s trade surplus with that country to $1.2 billion in January from $2.2 billion in December.
Exports to other countries were down 1.9 per cent to $10.9 billion in January, while imports were up 0.2 per cent to $14.5 billion, widening the trade deficit with the rest of the world to $3.7 billion in January from $3.4 billion in December.
Meanwhile, Statistics Canada said the total value of building permits issued fell 12.9 per cent to $6.1 billion January.
That was weaker than the drop of 4.3 per cent expected by economists, according to estimates compiled by Thomson Reuters.
The federal agency said lower construction intentions for non-residential buildings in Alberta, British Columbia and Ontario were responsible for much of the national decline.
Building permits for non-residential construction totalled $2.0 billion in January, down 22.8 per cent from the previous month.
In the residential sector, the value of permits for multi-family dwellings fell 21.0 per cent to $1.5 billion in January — the fourth consecutive monthly decline.
Residential construction plans fell in eight provinces in January, with Alberta, British Columbia and Ontario registering the largest declines.
Note to readers: This is a corrected story. An earlier version incorrectly stated the value of non-residential construction permits.