OTTAWA—Canada’s trade deficit widened slightly in January but export volumes rose at their fastest pace in nearly two years, a signal that the non-resource side of the economy is picking up momentum.
Canada posted a trade deficit of 655 million Canadian dollars ($489 million) in January, Statistics Canada said Friday. Economists had expected a C$900 million deficit, according to Royal Bank of Canada.
December’s trade data were revised slightly to a deficit of C$631 million, compared with the previous estimate of a C$585 million shortfall.
Canadian exports rose 1.0% to a record C$46 billion in January, led by gains in consumer goods, and motor vehicles and parts. On a volume basis, exports were up 3.6% from the previous month, the largest monthly gain since May 2014.
The strong report “should provide some reassurance to the Bank of Canada that the weaker dollar is doing its job, supporting the [non-energy] export sector as the Canadian economy slowly adjusts to the massive wealth shock from lower oil prices,” TD Securities economist James Rossiter said.
Imports increased 1.1% to C$46.65 billion, led by gains in motor vehicles and parts, and consumer goods. Import volumes rose 1.6%.
Nonenergy exports, which the Bank of Canada expects to drive growth amid low energy prices, were up 2.3% in January. Energy exports fell 7.7% to C$5.52 billion.
The boost in nonenergy exports could give Bank of Canada Gov. Stephen Poloz more confidence in his expectation that Canada’s manufacturers will help pick up the slack from a contracting energy sector. The Canadian economy shrank during the first half of 2015 amid a sharp drop in oil prices that led many energy firms to pare back investment plans and cut jobs.
The Canadian economy grew a tepid 1.2% in 2015, its slowest pace of growth since the financial crisis.
In January, exports of consumer goods rose almost 14% to C$7.31 billion, and sales abroad of motor vehicles and parts increased around 7% to C$9.10 billion. Those increases were moderated by a 35% decline in exports of aircraft and other transportation equipment and parts, which fell to C$1.53 billion.
Canadian exports to the U.S., which takes about three quarters of Canadian exports, rose 2.6% to C$34.94 billion in January. Exports to the rest of the world declined 3.7% to C$11.06 billion.
