Canadian exports rose to a record high in April as firms shrugged off uncertainty caused by U.S. protectionist policies, helping to cut the trade deficit to a six-month low, Statistics Canada data indicated on Wednesday.
The deficit shrank to C$1.90 billion ($1.47 billion), down from C$3.93 billion in March. The shortfall – less than the C$3.40 billion deficit forecast by analysts in a Reuters poll – was the smallest since a C$1.49 billion gap recorded in October 2017.
“It’s really positive as we head into the second quarter. There is continued strength in the export side,” said Ross Prusakowski, a senior economist at Export Development Canada.
The data were released as policymakers fret over the impact of new U.S. tariffs on steel and aluminum imports and slow-moving talks to modernize the North American Free Trade Agreement.
The Bank of Canada repeatedly cites the uncertainty over NAFTA’s future as a risk factor for the economy. That means the central bank will be data-dependent as it sets monetary policy, Governor Stephen Poloz said on Saturday.
Canada’s exports increased 1.6 percent – the sixth gain in seven months – to a new high of C$48.56 billion, on higher shipments of metal and non-metallic mineral products, consumer goods and energy products.
“It is nice in the short term, but there are a lot of issues ahead of us for Canadian exporters to deal with,” said Michael Dolega, a senior economist at TD Bank.
Imports, which hit a new high in March, dipped 2.5 percent to C$50.47 billion in April. Imports of motor vehicles and parts fell 5.8 percent after two months of strong increases.
The Canadian dollar strengthened, rising to C$1.2878 to the U.S. dollar, or 77.65 U.S. cents, from C$1.2909, or 77.47 U.S. cents, before the data were released.
Separately, data released in Washington showed the U.S. trade deficit in April fell to a seven-month low.
The data underscored the continued importance of the giant U.S. market, which took 74.3 percent of all Canadian goods exports in April.
Exports to the United States rose 3.2 percent while imports dropped 1.4 percent. As a result, the trade surplus with the United States grew to C$3.63 billion in April from C$2.03 billion in March.
Separately, Statscan said the value of Canadian building permits fell 4.6 percent in April from March, the biggest decline in five months, on weakness in both the residential and non-residential sectors.