The Canadian trade deficit unexpectedly widened to $0.9 billion in July, larger than market expectations for a $0.2-billion shortfall, following a $0.5-billion deficit in June, according to figures released this morning by Statistics Canada.
The deterioration in the balance in July reflected both a $0.2-billion (0.6%) dip in exports and a $0.2-billion (0.6%) rise in imports.
The drop in exports reflected sizable declines aircraft exports (-22.8%) and metal and non-metallic mineral products (-7.3%).
Rising crude oil (+6.5%) and forestry product (+8.2%) exports provided only partial offset. The gain in imports reflected sizable increases in metal and non-metallic minerals (+38.5%) and basic and industrial chemical, plastic and rubber products (+12.8%) that offset disappointing declines in electronic equipment (-3.4%) and industrial machinery and equipment (-1.2%) products.
Experts at RBC Economics report, "we continue to expect that a rebound from flood/strike related weakness in June as well as stronger activity in the manufacturing, wholesale, and retail sectors outside of Alberta and Quebec will result in a sharp bounce-back in GDP after growth slowed to a 1.7% rate in Q2 from 2.2% in Q1.
"Our current forecast," the bank concludes, "assumes growth will strengthen to a 3.4% pace in Q3."
