RPT-UPDATE 2-Canada trade deficit down, surplus with US shrinks

(Repeats to widen distribution)

* Trade deficit falls to C$1.71 billion

* Exports up by 3.1 pct, imports rise by 1.2 pct

* Surplus with United States lowest since Sept. 1992
(Adds details, reaction)

By David Ljunggren

OTTAWA, Dec 10 (BestGrowthStock) – The Canadian trade deficit was
smaller than expected in October, with stronger international
exports of industrial goods and materials helping to overcome a
shrinking surplus with the United States, by far Canada’s
largest trading partner.

The deficit in October was C$1.71 billion ($1.69 billion),
down from a revised C$2.31 billion in September, Statistics
Canada said on Friday. Market analysts had predicted a deficit
of C$2.1 billion in October.

In recent months the high Canadian dollar and weak U.S.
economy have cut demand in the United States, which as recently
as a few months ago was taking around 75 percent of Canada’s
exports every month.

In October, the trade surplus with the United States was
just C$1.13 billion, the smallest since September 1992. The
United States took 70.0 percent of Canada’s exports, the lowest
level since the 69 percent recorded in July 1982.

TD Economics economist Diana Petramala said Canada
accounted for just 14 percent of imports bought by the United
States, down from almost 20 percent in 2001.

“While we think that this is as low as it can get, the high
Canadian dollar will likely constrain exporters from regaining
much of the ground lost during the crisis,” she noted.

Both the government and the Bank of Canada have highlighted
the difficulties posed by the weak U.S. economy.

In New York, Finance Minister Jim Flaherty told Reuters
that “we realize our economy won’t have substantial recovery
without recovery in the United States”. [ID:nN10294555]

Exports to the rest of the world, excluding the United
States, increased by 10.1 percent from September.

Ottawa, stressing the need to diversify its exports, is
pressing ahead with plans to negotiate free trade agreements
with major nations and trading blocs such as India and the
European Union.

Friday’s trade data barely affected the Canadian dollar,
which was at C$1.0100 to the U.S. dollar, or 99.01 U.S. cents,
at 10:20 a.m. (1520 GMT), up from Thursday’s North American
close at C$1.0105 to the U.S. dollar, or 98.96 U.S. cents.

October marked the sixth consecutive month that Canada has
run a trade deficit.

Exports rose by 3.1 percent to C$33.77 billion on higher
shipments of industrial goods and materials.

Eric Lascelles of TD Securities said he was heartened by
the report, while pointing out that copper exports soared by
243 percent. Copper prices are hovering near record highs, in
part due to increased Chinese demand and a supply shortage.

“It is worth noting that this category is always volatile,
and encounters triple digit adjustments several times each
year,” he said.

Imports grew by 1.2 percent to C$35.49 billion, pushed
higher by shipments of energy and automotive products.

($1=$1.01 Canadian)
(Reporting by David Ljunggren; editing by Rob Wilson)

RPT-UPDATE 2-Canada trade deficit down, surplus with US shrinks