Figures released this morning by Statistics Canada may have provided a slightly brighter start to an otherwise gloomy -- and short -- week.
The June merchandise trade report was better than expected with the deficit unexpectedly improving to $0.47 billion from a May deficit of $0.78 billion. Expectations going into the report were for a deficit of $0.56 billion. The improvement largely resulted from the May shortfall being increased from a previously-estimated $0.30 billion. The deficit in April was also increased to $1.18 billion from $0.95 billion.
Expectations of a deterioration in June trade were partly based on the assumption that the Alberta floods likely weighed on activity in the energy sector curtailing energy exports. This was not evident in today’s report with imports rising $0.6 billion (1.4%) which more than offset the $0.3 billion (0.6%) rise in imports.
"The improvement in the June real net export balance", according to experts at RBC Economics, "is encouraging as it suggests a limited impact from the Alberta floods on Canadian external trade. However, the shrinking of the deficit largely resulted from a sizable upward revision to the shortfall in May.
"As a result," the bank concludes, "of these revisions external trade is expected to subtract 0.1 percentage point from annualized Q2 GDP growth down from a 1.4 pp contribution in the first quarter. "
