Canada’s trade deficit grew to $2.7 billion in February

Canada ran a merchandise trade deficit of $2.7 billion in February compared with a deficit of $1.9 billion in January, reported Statistics Canada on Thursday.

Economists had expected a deficit of $2 billion, according to Thomson Reuters.

The increased deficit came as imports rose 1.9% to $48.6 billion, boosted by imports of energy products.

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Exports increased 0.4% to $45.9 billion, due to higher exports of passenger cars and light trucks.

Despite the rebound in export volumes, the trade deficit remains disappointing given the strong U.S. economy and weak Canadian dollar, said Royce Mendes, senior economist at CIBC Economics, in an email note to clients.

Regionally, Canada’s trade surplus with the United States narrowed to $2.6 billion in February compared with $2.9 billion in January, as imports from the U.S. grew 3.3%. Exports to the U.S. increased 1.9%.

Canada’s trade deficit with countries other than the United States increased to $5.3 billion in February from $4.9 billion in January.

However, Mendes added in his email that this data should be positive for fixed income. “It plays into our forecast for a patient Bank of Canada, and bearish for the Canadian dollar,” he wrote.

Also read:

Near-term outlook for loonie and U.S. dollar

January trade deficit narrows, but numbers still disappoint

Staff, with files from The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.