OTTAWA, (Reuters) – Canada’s exports dropped for the first time this year in July, largely due to lower energy prices, while imports fell to a lesser degree leading to a narrower trade surplus, Statistics Canada data showed on Wednesday.
Canada’s trade surplus with the world edged down to C$4.05 billion ($3.07 billion) in July from a downwardly revised C$4.88 billion in June, though still beating forecasts of C$3.80 billion. Exports dropped 2.8%, while imports were down 1.8%.
“At face value, not a great month. But if you look into the details, if you dig a little bit deeper, there’s some really encouraging details in there,” said Stuart Bergman, chief economist at Export Development Canada.
Bergman noted the decline in export values was largely driven by lower prices for oil and natural gas. Energy prices soared after Russia’s invasion of Ukraine in February, but have been steadily easing since June. Russia calls its actions in Ukraine “a special military operation.”
In volume terms, exports were up 1.7%, the third consecutive monthly increase, Statscan said.
“We expect that the momentum should continue, albeit at a slower pace going forward, particularly when it comes to the United States,” said Bergman.
Canada’s exports to the United States, its largest trading partner, declined in July for the first time in seven months.
Overall, Canada’s exports value has risen by almost a fifth since the start of the year, with higher prices behind the bulk of that increase, Statscan said.
Exports of consumer goods fell 14.3% in July, while energy products were down 4.2%, data showed. On the imports side, consumer goods were down for the third consecutive month, with decreases observed in most subcategories.
The Canadian dollar was trading 0.1% higher at 1.3145 to the greenback, or 76.07 U.S. cents, after the Bank of Canada raised its policy rate to 3.25% and signaled more tightening to come.