OTTAWA (Reuters) - Canada’s imports and exports jumped sharply in June on the automobile sector’s recovery, though a slower gain in exports led the trade deficit to unexpectedly balloon to C$3.19 billion ($2.41 billion).
Analysts polled by Reuters had predicted June’s trade deficit would be C$0.90 billion. Statscan revised May’s deficit up to C$1.33 billion from an initial C$0.68 billion.
Imports jumped 21.8% from May and exports rose 17.1%, though both remain at levels well below those in February before the coronavirus outbreak.
Imports of motor vehicles and parts jumped to $5.23 billion from C$1.66 billion in May, accounting for almost half the total growth in imports. June was the first full month of production since February for the integrated North American motor vehicle industry.
The motor vehicle and parts industry also accounted for more than two-thirds of the overall growth in exports. Metal exports were also strong, while energy exports rose slightly.
“This is sort of a start-your-engines month,” said Peter Hall, chief economist at Export Development Canada.
He noted that the auto sector rebound also highlights a return of consumer confidence in purchasing big-ticket items. “It’s a very strong statement on the overall economy,” Hall said.
Exports to and imports from the United States, meanwhile, both rebounded but remain well below pre-pandemic levels. Economists warned that the outlook for the United States, Canada’s largest trading partner, remains an unclear.
“The big go-forward risk remains that re-escalation of virus spread in the United States will prompt renewed shutdowns and weigh on Canadian trade flows once again as a result,” Nathan Janzen, senior economist at RBC Economics, said in a note.
The Canadian dollar CAD= gave back some of its gains after the data, having strengthened earlier to its highest in more than five months at 1.3230 per U.S. dollar, or 75.59 U.S. cents.
Additional reporting by David Ljunggren in Ottawa and Fergal Smith in Toronto; editing by Jason Neely, Bernadette Baum and Jonathan Oatis
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