Canada records bigger than expected trade surplus in February

Canada recorded a bigger than expected trade surplus of $1.39-billion in February as a record level of unwrought gold helped export growth outpace the monthly rise in imports, data showed on Thursday.

Analysts polled by Reuters had forecast a $800-million surplus in the month. January’s trade balance was upwardly revised to $608-million from a surplus of $496-million initially reported.

Total exports rose 5.8 per cent, the fastest growth rate since August, while imports increased 4.6 per cent to their highest level since June, Statistics Canada said.

The merchandise trade report showed further signs of economic resurgence after it stumbled in the second half of 2023. Economic growth rebounded more robustly than expected in January, and gross domestic product likely expanded 0.4 per cent in February, data released last week showed.

The international trade data bolsters the fact that February will once again post solid growth.

The strong growth, which put the economy on track to exceed the Bank of Canada’s forecast for the first quarter, has likely eased the urgency for a rate cut, economists have said, and Thursday’s data is expected to ease the pressure further.

The central bank has kept borrowing costs at a more than two-decade high of 5 per cent to cool inflation. While that has crimped consumer spending, it has not taken the steam out of the economy, allaying fears of a recession speculated last year.

The BoC will update its growth forecasts and monetary policy decision on April 10.

The Canadian dollar strengthened with the local currency trading 0.3 per cent stronger at 1.3485 to the US dollar at 1249 GMT.

The rise in exports in February was led by the metal and non-metallic mineral products group which includes unwrought precious metals like gold. Increased high-value shipments of refined gold, as well as transfers of gold assets in the banking sector, were observed in February, Statscan said.

By volume, total exports rose 6.2 per cent.

Growth in imports was led by the electronic and electrical equipment and parts product group which increased to a record level in February. There was an increase in imports of high-value data processing units, generally used for the development of complex cloud systems, from the United States.

Imports of consumer goods were also up, with the clothing, footwear and accessories category posting the largest increase.

By volume, total imports increased 4.1 per cent.

Overall, 9 of the 11 export product sections rose in the month, while all import product sections, except metal and non-metallic mineral products, were up.