UPDATE 1-Canada posts unexpected trade deficit in blow to recovery hopes

Tue Jan 7, 2014 8:42am EST

Related Topics

* Canada exports flat, imports edge up by 0.1 percent

* Canada posts 23rd consecutive monthly trade deficit

* Statistics Canada revises Oct surplus to big shortfall

OTTAWA, Jan 7 (Reuters) - Canada posted a much larger than expected trade deficit of C$940 million ($879 million) in November, most likely knocking market hopes that the beleaguered export sector might be starting to recover.

The deficit - the 23rd in a row - was significantly wider than the C$140 million shortfall forecast by market experts.

Statistics Canada on Tuesday also revised October's initial surplus of C$75 million to a deficit of C$908 million, in part to reflect revised data on crude oil prices. Initial trade statistics for any given month include estimates of crude prices rather than hard figures.

The value of exports was unchanged from October as volumes fell by 0.7 percent while imports increased by 0.1 percent on flat volumes. Since the 2008/09 recession, exports have struggled with a strong Canadian dollar and weak markets.

Before Statscan's drastic October revision, the trade balance had been improving for three straight months. Bank of Canada Governor Stephen Poloz told Reuters last month that the main risk to the outlook for the domestic economy in 2014 was that exports would not recover as anticipated.

Exports to the United States, which comprised 75.3 percent of all Canadian exports in November, grew by 0.6 percent, while imports rose by 2.0 percent. As a result, the trade surplus with the United States fell to C$2.75 billion from C$3.08 billion in October.

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