Canada's merchandise trade deficit hits record in June - Action News
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Canada's merchandise trade deficit hits record in June

Canada's trade deficit widened in June to a record $3.6 billion, up from $3.5 billion in May, Statistics Canada reported Friday.
Canada's merchandise trade deficit with the world widened from $3.5 billion in May to a record $3.6 billion in June. (Canadian Press)

Canada's trade deficit widened inJune to a record $3.6billion, up from $3.5 billion in May, Statistics Canada reported Friday.

The country's imports for the monthincreased0.8 per centto $45.0billionwhileexportsincreased0.6 per centto $41.4billion.

Imports from the United States, our biggest trading partner,were up1.5 per centto $29.8billion and exports were down1.2 per centto $31.6billion. As a result, Canada's trade surplus with the United States narrowed from $2.6billion in May to $1.8billion in June.

For the April-June quarter,Canada's trade deficit with the world widened from $6.4billion in the first quarter of2016to a record $10.7billion.

Weaker GDP

Economists suggest thetrade numbers point to a weakersecond-quarter gross domestic product than expected by the Bank of Canada.

"[The second quarter] is looking quite soft on the back of these numbers," Scotiabank Economics said in a commentary.

TD economists called the trade data "disappointing" and noted that it was thefifth consecutivemonth of declines in export volumes.

"While some of this can be put down to weak energy exports given the disruptions in that sector, the more concerning trend is the ongoing weakness in non-commodity exports," wrote TD economistBrian DePratto in a note. "With export growth in these sectors failing to materialize, the ongoing rotation of Canadian economic growth appears to have stalled in the first half of this year."

More stimulus?

The poor trade figures, coupled with the loss of 31,200 jobs in July, led tosuggestions the Canadian economy may need some morestimulus.

"Canada is counting on the export sector tostep up to the plate and this is another month where we just
didn't see it," AveryShenfeld, chiefeconomist at Canadian Imperial Bank of Commerce, told Bloomberg.

"If that doesn't turn by the end of the year wecould be looking for another doseof stimulus, preferably fiscal
stimulus rather than throwing more fire on a housing bubble withlower rates," Shenfeld said.