(Updates with economist comment in fourth paragraph, U.S. trade report in last paragraph.)
Oct. 13 (Bloomberg) -- Canada’s merchandise trade deficit was narrower than economists forecast in August as exports and imports both rose, government figures showed.
The deficit of C$622 million ($609 million) in August was smaller than the C$1 billion median estimate in a Bloomberg survey with 22 responses. Statistics Canada today also reduced its estimate of July’s deficit to C$539 million from an earlier figure of C$753 million.
The August deficit was the country’s seventh straight. A drop in exports, hobbled by the drag of a strong dollar and weak U.S. demand, caused the economy to shrink in the second quarter. Central bank Governor Mark Carney has said strains from abroad have intensified in the last few months, citing Europe’s debt crisis and a slow U.S. expansion.
“The bigger question is does something much more dire lie ahead,” said Doug Porter, deputy chief economist with BMO Capital Markets in Toronto. “We will see considerably slower trade trends through the rest of this year.”
Canada’s dollar weakened today versus its U.S. counterpart as declines in equities and crude oil, the nation’s biggest export, dimmed the appeal of currencies tied to global economic growth. The Canadian currency fell 0.5 percent to C$1.0223 per U.S. dollar at 9:39 a.m. in Toronto.
Exports rose 0.5 percent in August to C$37.9 billion, as shipments to non-U.S. countries grew 7.9 percent to a record C$11.2 billion, Statistics Canada said.
Machinery and equipment exports advanced 7.3 percent to C$7.36 billion. Industrial goods and materials shipments rose 2 percent to C$10.1 billion.
Imports grew 0.7 percent in August to C$38.5 billion, Statistics Canada said. Machinery and equipment gained 2.5 percent to C$10.5 billion, and automotive imports rose 2.3 percent to C$6.25 billion.
The volume of exports, which excludes the impact of price changes, fell 1.1 percent. Import volumes fell 0.1 percent.
The trade surplus with the U.S., which buys three-quarters of Canada’s exports, narrowed to C$2.54 billion in August from C$3.65 billion in July.
“The base case is continued growth, sluggish,” Canadian National Railway Co. Chief Executive Officer Claude Mongeau said at a Sept. 22 investor conference. “It’s going to be sub-par growth for many years to come,” he said, adding shipping volumes had increased 4 percent from a year earlier.
The U.S. trade deficit was little changed in August at a four-month low of $45.6 billion as exports held close to an all- time high, the Commerce Department said from Washington today.
--With assistance from Ilan Kolet in Ottawa. Editors: Paul Badertscher, James L Tyson
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