OTTAWA — The economy showed signs of strength in April as Canada posted its smallest merchandise trade deficit since October last year, helped by a rise in exports.
Statistics Canada said Thursday the country’s trade deficit shrank to $966 million in April compared with a deficit of $2.8 billion that economists polled by Thomson Reuters Eikon had expected for the month.
The agency also revised its reading for March to show a trade deficit of $2.3 billion compared with an initial reading of $3.2 billion.
CIBC economist Royce Mendes said the good news on the Canadian economy just keeps rolling in.
“Not only did the trade deficit narrow sharply from the last time Statistics Canada reported the numbers, but a revision also made the prior month look somewhat better than the wide deficit originally reported.
“Combined with a solid handoff from March and an apparent surge in hiring, early indications suggest that April is shaping up to be a solid month for growth in Canada.”
Economic growth in Canada came in at an annual pace of just 0.4 per cent in the first quarter, making the weakest back-to-back quarters of growth since 2015.
However, the Bank of Canada has said that it expects the weakness to be temporary and expects the economy to pick up pace throughout the rest of this year.
The next key piece of economic data on the strength of the Canadian economy will come on Friday when Statistics Canada releases its labour force survey for May.
The jobs report last month saw the economy add a record 106,500 jobs in April, the biggest one-month increase since the government started collecting comparable data in 1976.
The smaller-than-expected trade deficit in April came as exports rose 1.3 per cent in the month to $50.7 billion, as exports of metal and non-metallic mineral products climbed 15.0 per cent, boosted exports of gold.
Exports of farm, fishing and intermediate food products increased 5.1 per cent for the month, helped by a 21.7 per cent increase in wheat. However, exports of canola fell 14.7 per cent as they saw no shipments to China in April.
China has rejected Canadian canola seeds in recent months and barred shipments from two of Canada’s biggest exporters in what is considered retaliation for the detention of Huawei executive Meng Wanzhou.
Meanwhile, imports fell 1.4 per cent in April to $51.7 billion as imports of aircraft and other transportation equipment and parts fell 23.6 per cent.
In volume terms, exports were up 2.0 per cent, while imports fell 1.9 per cent.