Canada's trade deficit widens to $3.4 billion in August

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Washington, DC, October 5, 2017-The goods and services deficit was $42.4 billion in August, down $1.2 billion from $43.6 billion in July, revised, the U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today. Imports, meanwhile, were largely unchanged. Following are the seasonally adjusted figures in billions of Canadian dollars: Merchandise trade Aug July (rev) change pct July (prev) Balance -3.413 -2.983 n/a -3.040 Exports 43.630 44.051 -1.0 44.139 Imports 47.043 47.034 0.0 47.179 NOTE: Analysts surveyed by Reuters had on average forecast a deficit of C$2.60 billion in August.

The August trade deficit was wider than what traders anticipated.

"Looking ahead, exports should continue to benefit from the recent strength of global growth and, with the boost from the dollar's 7% trade-weighted depreciation this year only starting to feed through, exports should remain strong for the rest of this year", Hunter said.

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"We continue to expect that a pickup in trade growth globally in recent quarters and signs of life in the USA industrial sector will ultimately support a return to a gradual uptrend in Canadian exports going forward, although attention will also be paid to any signs that the ... appreciation in the Canadian dollar since early June is eating into Canada's share of foreign demand", said Royal Bank of Canada senior economist Nathan Janzen.

Exports of goods increased a slight $600 million, while imports of goods decreased $300 million, underpinned by volatility in the energy category.

Notable increases in exports of pharmaceutical preparations and telecommunications equipment were partly offset by decreases in exports of fuel oil and foods, feeds, and beverages.

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Overall exports to the United States, which accounted for 74.8 percent of Canadian goods exports in August, fell by 1.8 percent, while imports rose by 0.9 percent.

The Canadian dollar weakened after the release, dropping to C$1.2545 to the USA dollar, or 79.71 US cents, from C$1.2478, or $80.14 US cents. "Furthermore, U.S. auto sales have rebounded smartly recently, and the elevated inventory levels that we had highlighted as a threat to Canadian exports have also come down to more normal levels".

Looking at only trade in goods, August imports to the US from China were $45.8 billion, the highest on record.

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