Canada Trade Surplus Widens; Imports Fall Faster Than Exports

(Bloomberg News)

Canada’s trade surplus unexpectedly widened in August, with imports falling twice as fast as exports as fewer cars and parts moved across the border with the U.S.

The surplus grew to C$4.1 billion ($4.2 billion), from a revised C$3.4 billion in July, Statistics Canada said today in Ottawa. Imports fell 3.9 percent and exports dropped 1.8 percent, with both declines paced by the automotive industry. The only categories with gains were exports of machinery and both imports and exports of farm and fish products.

Economists had forecast the overall surplus would be little changed from the initial July estimate of C$3.7 billion, according to the median of 25 estimates in a Bloomberg News survey.

The wider trade surplus may not last, coming the month before the Canadian dollar rose to parity with the U.S. currency for the first time since 1976, making Canadian exports less competitive. Canada’s currency has risen 19 percent this year and 62 percent over the last five years.

In the auto industry, Canada exports most of its production to the U.S., and parts often move back and forth across the border as vehicles are assembled. In August, U.S. consumers were hit by the collapse of the subprime-mortgage market.

A separate Statistics Canada report today showed Canadian new-home prices rose 6.5 percent in August from a year ago. From July, home prices rose 0.4 percent, slower than the 0.6 percent gain economists polled by Bloomberg had expected.