* Canada posts best trade performance in 10 months
* Building permits edge up after bad two months
By David Ljunggren
OTTAWA, March 7 Canada's hard-pressed economy
showed signs of recovery in January, when the nation posted its
best trade performance in almost a year and building permits
eked out modest growth after the biggest two-month fall in 24
Canada is struggling to cope with weak exports, tough
competition, uncertain foreign markets and a strong Canadian
dollar, which combined to produce a 0.2 percent drop in gross
domestic product in December.
Exports grew faster than imports in January, when the trade
deficit shrank to just C$237 million ($230 million), Statistics
Canada said on Thursday.
The deficit - less than the C$600 million predicted by
market operators - represented the best performance since a C$21
million trade surplus in March 2012. Statscan revised December's
deficit to C$332 million from an initial C$901 million.
"The improvement in the trade picture, small as it may be,
is an important first step for the Canadian economy this year,"
Francis Fong of TD Economics said in a note to clients. "After
an undeniably weak 2012, exports are going to be increasingly
looked to as a driver of growth, given that households and
government are expected to moderate spending.
"Over the course of 2013 and through 2014, global economic
growth should accelerate, particularly in the U.S., and this
should provide Canada's export sector with the shot-in-the-arm
it needs to post a more sustained recovery."
The data, along with figures that showed a widening trade
deficit in the United States, helped push the Canadian dollar
slightly higher. By 9.55 a.m. (1455 GMT) it was trading
at C$1.0292 to the U.S dollar, or 97.16 U.S. cents. It had
closed at C$1.0315 versus the U.S. dollar on Wednesday.
January exports rose by 2.1 percent - the greatest
month-on-month increase since the 4.3 percent jump seen in
December 2011 - thanks mainly to higher volumes for crude oil
and crude bitumen as well as precious metals.
Imports increased by 1.9 percent on higher volumes, mainly
due to higher shipments of energy products. Imports of metal
ores and industrial machinery also grew.
"Higher imports might suggest more robust domestic activity
in the month. What argues against this, however, is that much
of the monthly rise in import volumes was due to energy and
metal ores. Other key import categories were not as strong,"
wrote Derek Holt and Dov Zigler, economists at Scotia Capital.
Exports to the United States - which took 74.2 percent of
all Canadian exports in January - rose by 2.6 percent while
imports were up 2.1 percent. As a result, Canada's trade surplus
with the United States increased to C$4.25 billion from C$4.03
billion in December.
Separately, Statscan said the value of Canadian building
permits edged up by 1.7 percent in January after posting the
biggest two-month fall in almost a quarter century.
The increase, less than the 5.3 percent expected by market
analysts, follows revised drops of 10.4 percent in December and
16.5 percent in November.
Canada's booming housing industry, boosted by low interest
rates, helped the economy recover from the worst of the 2008-09
recession. In a bid to head off a possible bubble, the
government stepped in last year to clamp down on the sector with
tighter mortgage rules. This has since cooled the market.