Canada unexpectedly fell back into a trade deficit with the world in April in a sharp reminder that despite recent encouraging signals of economic life, the export-oriented economy remains in a significant recession.
Statistics Canada reported the country posted a small trade shortfall of $179 million after two straight months of surpluses, including a $1-billion positive reading in March.
Given the importance of exports in Canada’s economic well-being, the retreat does not bode well for second-quarter growth performance after a 5.4 per cent tumble in the first quarter, said Douglas Porter, deputy chief economist with BMO Capital Markets. “There’s no sugar-coating this result … this red (ink) is simply bad news,” he said.
“While much of the drop in export receipts was due to a 3.2 per cent decline in prices, the volume of exports also fell significantly — and we can’t blame this one on autos … it was broad-based weakness.”
Auto exports performed a rare gain in the month, although that will be wiped out in May because Chrysler shut down its plants while restructuring under bankruptcy protection.