Canada's trade surplus hit a 16-month high in February as recovering global demand for autos, metal ores and fertilizers propelled exports.
It's the fifth month in a row of surpluses. In February, it widened to $1.4-billion from $754-million in January, Statistics Canada said Tuesday, topping forecasts. Exports climbed 2.8 per cent, outpacing a 0.9-per-cent increase in imports.
It's the latest sign the economy is healing, helped by growing global demand for Canadian products. Exports reached $34-billion in the month as both prices and volumes rose – the fifth increase in export volumes and prices in six months. That indicates that, at least so far, exporters are coping with an elevated currency.
“This was a very strong trade report, and it suggests that the Canadian external sector continues to defy the drag coming from the very strong Canadian dollar,” said Millan Mulraine, senior Canada macro strategist at TD Securities. The dollar, which has since hit parity, may start to weigh on the sector in the coming months though, he cautioned.
Economists have been revising their estimates for first-quarter growth upward in recent weeks. Tuesday's trade report is the last major economic release before next Tuesday, when the Bank of Canada announces its interest-rate decision. The central bank is widely expected to boost rates in June or July.
“The unexpected improvement in the trade surplus in February suggests that net exports will likely contribute positively to overall GDP growth in the first quarter,” said Nathan Janzen, economist at Royal Bank of Canada, in a note.
Economists had expected a surplus of $600-million, according to Bloomberg.
Exports to the United States, Canada's largest trading partner, rose 2 per cent on as demand for auto products increased. Canada's trade surplus with its southern neighbour widened to $4.4-billion in February from $4.2-billion in January. Some economists question whether U.S. demand will remain once federal stimulus spending tapers off.
