BMO calls it a worrying sign the transition away from energy sector-driven growth might be stalling.
OTTAWA — The country’s trade deficit deepened in April and stayed near that level in May, Statistics Canada said, raising concerns that economic weakness in the second quarter could be worse than initially feared.
The federal agency said the trade deficit in May was $3.28 billion as exports of crude oil and bitumen grew despite the wildfires in Fort McMurray, Alta. that forced several oil sands operations to shut down production. By some estimates, more than 1 million barrels per day of crude production was knocked offline – about 40% of all Canadian oil sands output.
Economists had expected a trade deficit of $2.7 billion for the month, according to Thomson Reuters.
Based on preliminary evidence, Statistics Canada said refinery activity slowed in May, freeing up oil for export, and the remaining shortfall in crude production was largely offset by a reduction in Alberta oil inventories.
Exports of crude oil and bitumen were up 10.5% at $3.8 billion, as prices were up 9.9% and volumes rose 0.6%.
Overall, exports fell 0.7% to $41.1 billion in May, while exports excluding energy products declined 1.8%. Imports slipped 0.8% to $44.4 billion.
The result from April was also revised to show a historic trade deficit of $3.32 billion compared with an initial estimate of a $2.94 billion deficit.
Bank of Montreal senior economist Benjamin Reitzes called the trade report “very downbeat.”
“The string of declines in export volumes is a worrying sign that the transition away from energy sector-driven growth might be stalling,” Reitzes wrote in a report.
“Add on the uncertainty surrounding the global economic outlook following the Brexit vote and Canadian trade will likely have trouble gaining meaningful traction in the near term.”
The trade figures offer the first glimpse of how the economy weathered the Alberta wildfires, which forced the evacuation of the city of 80,000.News from © Canadian Press Enterprises Inc. 2016