(Adds analyst comment, details of release, Canadian dollar
By David Ljunggren
OTTAWA May 4 Canada's trade deficit narrowed
sharply to just C$135 million ($99 million) in March as exports
surged to a new high on shipments of energy products, an early
sign the first quarter ended strongly.
Statistics Canada said on Thursday that the value of exports
jumped by 3.8 percent to C$46.98 billion as volumes increased by
2.5 percent and prices grew by 1.3 percent.
Analysts in a Reuters poll had forecast a shortfall of C$800
million. Statscan revised February's deficit to C$1.08 billion
from an initial C$972 million.
The Canadian economy stalled in February after a healthy
start to the year, data showed last week.
"A strong first indicator on March GDP suggests there could
be some decent momentum heading into the second quarter," CIBC
economist Nick Exarhos said by phone.
The Canadian dollar strengthened slightly to C$1.3716 to the
U.S. dollar, or 72.91 U.S. cents, up from C$1.3736, or 72.80
Energy products rose 7.0 percent, pushed up by higher
natural gas flows to the United States and a spike in exports of
coal to Asia that coincided with a slowdown in Australian
production caused by a cyclone.
Imports grew 1.7 percent to C$47.11 billion on higher inward
flows of metal and non-metallic mineral products, particularly
unwrought gold from Japan. Volumes slipped by 0.2 percent while
prices advanced by 1.9 percent.
"The increase in imports points to improvements in business
investment spending and inventory rebuilding, both contributors
to GDP," National Bank economist Krishen Rangasamy said in a
note to clients.
Despite the cheery trade news, challenges may be ahead.
In April, the Bank of Canada lowered its export growth
forecast to 2.5 percent over the next three months from around
3.0 percent in January due to the additional drag on global
investment from uncertainty over U.S. trade policy.
Shortly afterwards, the U.S. administration slapped tariffs
on Canadian exports of softwood lumber and complained about
Canada's dairy sector, helping to sink the Canadian dollar to
Exports to the United States, which accounted for 73.1
percent of all Canadian exports in March, edged up by 0.1
percent while imports increased by 2.0 percent. As a result,
Canada's trade surplus with the United States slipped to C$3.97
billion from C$4.51 billion in February.
(Editing by Bernadette Baum)