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Canada's trade deficit widens

Published by Steve Coleman on October 13, 2011

After narrowing in July, Canada's trade deficit with the rest of the world increased, again, in August.

Canadians bought another 0.2 per cent more than they exported in August, increasing the country's trade deficit from $539 million to $622 million.

While the value of imports increased to $38.5 billion for the month on a 0.8 per cent price increase, actual volumes fell 0.1 per cent for the month.

The higher dollar helped push the value of Canadian exports to $37.9 billion in August, based on higher prices in most sectors. Statistics Canada says prices rose 1.6 per cent, while volumes fell 1.1 percentage points.

Four-straight months of increased business for machinery, equipment and industrial goods and materials helped boost August's numbers.

Even Canada's trade surplus with the U.S. took a hit in August after exports to Canada's largest trading partner were down 2.3 per cent to $26.6 billion. On the flip side, American imports rose two per cent to $24.1 billion. It's the highest level since October 2008, Statistics Canada says.

As the trade surplus with the U.S. narrowed, the number fell from $3.7 billion in July to $2.5 billion in August.

"The good news is that, in August, we achieved record export levels in other foreign markets," said Jean-Michel Laurin, CME's vice president of global business policy. "It's good news in the sense that it shows that the hard work of our members is finally paying off. Manufacturers are investing considerable resources and finding new customers around the world and getting into new supply chains."

Exports to the rest of the world rose 7.9 per cent to a record $11.2 billion high. This represented a fourth consecutive monthly gain with countries other than the United States.

Imports from countries other than the U.S. fell 1.4 per cent to $14.4 billion. As a result, Canada's trade deficit with the country's other trading partners declined from $4.2 billion in July to $3.2 billion in August.

The one big difference before and after the last recession is the fact Canada is running a trade deficit. Prior to the 2008 crash, Canadian trade balances were usually in the black.

For a lot of companies that don't do business outside of North America, the last recession never really ended, Laurin said. Most of the growth has been from growth in developing countries.

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