Canada’s Current Account Surplus Widens on Commodity Prices

(Bloomberg – Alexandre Deslongchamps)

Canada’s current account, the broadest measure of international trade, grew to the highest in a year in the second quarter as prices for exported commodities such as oil and natural gas rose.
Receipts from outside Canada exceeded payments sent abroad by C$6.76 billion ($6.47 billion), after a revised C$4.46 billion first-quarter surplus, Statistics Canada said today [Thursday] in Ottawa.

Economists surveyed by Bloomberg forecast an C$8 billion surplus from April to June, the median of 20 estimates, after the initially reported first-quarter surplus of C$5.6 billion.

The report indicates commodity exports are helping the economy weather slower growth in the U.S., Canada’s main trading partner, so the central bank may be able to delay cutting interest rates to stimulate spending. Economic growth in Canada will be 1% this year, the slowest since 1992, the central bank said last month.

The surplus in goods trade grew to C$16.4 billion, the most since the fourth quarter of 2005, as oil and natural gas prices surged, Statistics Canada said. Natural gas appreciated 33 percent during the quarter, and oil gained 25%, boosting the value of sales even as they declined in volume terms. Sales of coal more than doubled on high global demand.

Canadian automotive exports fell for a fifth straight quarter to the lowest since the fourth quarter of 1996, Statistics Canada said today.

While companies’ sales abroad continue to be crimped by Canada’s high currency, the so-called loonie has weakened about 11% from a record 90.58 Canadian cents per U.S. dollar reached on November 7.

The deficit in travel narrowed for a second straight quarter to C$3.15 billion, as Canadians took fewer trips across the U.S. border.

The deficit in investment income widened for a second straight quarter to C$3.39 billion, the agency said.

Canada’s current account – the most complete measure of trade because it includes exports and imports of goods and services, transfers and investment income – has slumped from a record C$12.3 billion surplus two years ago.

Summary data and a link to the report are on the Statistics Canada website.