(Adds analyst reaction, Canadian dollar strengthening)
By David Ljunggren
OTTAWA, Sept 4 Canada's trade surplus in July
jumped to a near six-year high of C$2.58 billion ($2.37 billion)
in another sign the long-battered export sector could be on its
way to a lasting recovery.
Market analysts had expected a surplus of C$1.20 billion.
Statistics Canada, which released the data on Thursday, revised
June's surplus down to C$1.83 billion from an initial C$1.86
The July surplus was the largest since the C$2.61 billion
recorded in October 2008 and marked the first time since
November 2008 that Canada has posted three consecutive monthly
positive trade balances.
Exports of goods and services account for around 30 percent
of Canada's gross domestic product and are a major driver of the
Canada's exporters struggled since the 2008 recession to
cope with weak markets, increasing competition and a stronger
Canadian dollar. Policy makers, though, have long predicted that
as the U.S. economy strengthens, Canadian exports will recover.
Exports in July rose by 1.4 percent to a record C$45.54
billion, boosted by higher shipments of motor vehicles and
parts. Volumes increased by 1.1 percent while prices grew by 0.3
"This is very good news ... when the volumes actually
(grow), that's where the export employment figures start to
increase," Export Development Canada chief economist Peter Hall
Hall noted that Canada was on track to post an annual trade
surplus for the first time since 2011.
Exports of motor vehicles and parts grew by 9.7 percent, the
fifth increase in seven months, as automobile sales hit record
highs in Canada and the United States.
The data helped push the Canadian dollar up to
C$1.0847 to the greenback, or 92.19 U.S. cents, stronger than
Wednesday's close of C$1.0888, or 91.84 U.S. cents.
Imports fell by 0.3 percent to C$42.96 billion, in part due
to lower imports of aircraft and other transportation equipment.
The Bank of Canada on Wednesday said that while an
increasing number of export sectors appeared to be recovering,
the trend would need to be sustained before it resulted in
higher business investment and hiring.
The central bank has kept its key interest rate at a near
record low for four years and Governor Stephen Poloz - who has
repeatedly expressed concern about the export sector - had
indicated there is no chance of a hike until the economy picks
"The July data should give him (Poloz) a little bit more
confidence that the rotation to exports has some momentum behind
it," said TD Securities strategist Andrew Kelvin.
Exports to the United States, which made up 75.4 percent of
Canadian exports in July, grew by 1.9 percent while imports rose
by 1.2 percent. As a result, the trade surplus with the United
States increased to C$5.14 billion from C$4.85 billion in June.
(Additional reporting by Leah Schnurr in Toronto; Editing by
Chizu Nomiyama and Meredith Mazzilli)