Statistics Canada says the country’s trade deficit narrowed to $1.7 billion in September, giving rise to expectations that the economy may start to see the benefits of the weakened loonie.
Economists had expected a deficit of $1.9 billion, according to Thomson Reuters.
The result compared with a revised deficit of $2.7 billion in August that was first reported to be $2.5 billion.
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Bank of Montreal senior economist Benjamin Reitzes said trade is going to add significantly to growth in the third quarter.
“It appears that we may be seeing the positive impact from the weaker Canadian dollar and firming U.S. domestic demand,” Reitzes said.
“And, while Q3 was encouraging, there’s still plenty of room for trade to strengthen in the quarters ahead with non-energy export volumes still below year-ago levels.”
The drop in the deficit came as imports slipped 1.3% in September to $46.2 billion due to a decrease in metal and non-metallic mineral products.
Meanwhile, exports increased 0.7% to $44.5 billion on higher exports of consumer goods, energy products, and metal and non-metallic mineral products.
Import volumes fell 2.1% while prices increased 0.8%. Export volumes gained 0.7%, while prices were unchanged.
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Regionally, Canada’s trade surplus with the United States edged up to $3.17 billion in September from $3.15 billion in August as imports fell 0.4% and exports declined 0.3%.
Canada’s trade deficit with countries other than the United States was $4.9 billion in September compared with $5.8 billion in August.