OTTAWA – Canada’s trade deficit grew to $1.9 billion in February, more than triple the shortfall of $628 million the month before, Statistics Canada said Tuesday.
Economists had expected a deficit of $900 million for February, according to Thomson Reuters.
While exports fell from a record high in January, TD Bank economist Dina Ignjatovic said they “remain quite elevated” and noted that growth for the first quarter is tracking ahead of the bank’s forecast.
“Indeed, the sizable gains in export volumes recorded in recent months, combined with the underperformance of import volumes, suggests that net trade will contribute positively to overall growth in the first quarter,” she wrote in a note to clients.
“With the Canadian dollar expected to hover in the mid-70 US cent range over the remainder of the year, and the American economy on solid footing, Canada’s export sector should remain a key source of strength going forward.”
Statistics Canada says exports fell 5.4 per cent to $43.7 billion in February after the record high of $46.0 billion the month before.
The drop was led by consumer goods, energy products, and motor vehicles and parts, partially offset by higher exports of aircraft and other transportation equipment and parts.
Imports slipped 2.6 per cent to $45.6 billion in a widespread decline driven by a drop in energy products.
The disappointing trade figures follow a series of better than expected economic data including a report last week that the economy grew much faster than economists expected in January.
“After the strong January GDP print, we assumed some giveback in the coming months, and today’s data falls in line with that story,” CIBC economist Nick Exarhos said.
“However, putting things into context, growth should still come in close to three per cent in the first quarter, well above where expectations were set just a few months ago.”
In its most recent forecast, the Bank of Canada predicted the economy would grow by 1.4 per cent this year, but that did not account for the billions in new spending in the federal budget announced last month.
The central bank is expected to update its outlook when it publishes its monetary policy report next week.
Canada’s trade surplus with the United States, its biggest trading partner, slipped to $2.7 billion in February compared with $3.8 billion in January.
February exports to the U.S. fell 5.6 per cent to $33.1 billion and imports dropped 2.7 per cent to $30.5 billion.
The trade deficit with countries other than the U.S. increased to $4.6 billion in February compared with $4.4 billion in January.
Exports to the rest of the world fell 4.8 per cent to $10.5 billion, while imports from countries excluding the U.S. dropped 2.4 per cent to $15.1 billion.
Note to readers: This is a corrected story. A previous version said economists had expected a trade deficit of $900 million for January.