Canadian exports surged for a second month in July to the second highest on record, adding to evidence the nation’s economy is rebounding from a slump.
Exports rose 2.3 per cent after a 5.5 per cent gain in June, Statistics Canada said in a report Thursday from Ottawa. It was the biggest two-month increase since January 2011. The nation’s trade deficit narrowed to $593 million, the lowest since November 2014.
The report bolsters Bank of Canada Governor Stephen Poloz’s view non-energy exports are poised to help lead second-half revival in the nation’s trade sector, as businesses take advantage of a weaker currency and stronger global demand.
“The rebound in non-energy exports is really what the Bank of Canada has wanted to see,” Charles St-Arnaud, senior economist at Nomura Holdings Inc., said by phone from London. “They may actually be right” about a third-quarter rebound.
Economists surveyed by Bloomberg predicted the trade gap would widen to $1.2 billion.
The gain in exports was driven by a 9.9 per cent increase in motor vehicle shipments, a 19 per cent jump in aircraft-related sales and a 7.3 per cent rise in consumer goods.
Energy product exports dropped 5.7 per cent to $7.3 billion. Excluding energy, the nation’s shipments abroad rose by 4 per cent.
Poloz will hold interest rates at 0.5 per cent when the central bank meets next week, St-Arnaud said, adding there probably won’t be a change in the policy rate “for a long time.”
Imports rose 1.7 per cent in July. On a volume basis, exports increased 1 per cent, while imports were up 0.5 per cent.
The surplus with the U.S. narrowed to $3.79 billion in July from $4.36 billion a month earlier.
— With assistance from Greg Quinn in Ottawa and Erik Hertzberg in Ottawa.