Canada’s trade surplus has fallen to its lowest level in a year, Statistics Canada said today.

Thanks to a drop in exports, October’s surplus fell to $4.4 billion, down from $5 billion in September, which itself was revised downward from an initial estimate of $5.1 billion.

The surplus peaked in June at $7.4 billion, a three-and-a-half-year high.

Canadian exports registered their fourth straight monthly decline — a fall of 1.1% to $35.6 billion in merchandise in October.

“The strong Canadian dollar and shipping congestion at Canadian ports were likely contributors to the lower export traffic,” Statistics Canada said.

Imports rose for the second straight month in October, edging up 0.9% to $31.3 billion. The increase was mainly caused by a 16.5-per-cent surge in imports of energy products.

Canada’s trade surplus with the United States narrowed to $7.6 billion from $7.9 billion, as exports from the U.S. fell at more than twice the rate of imports.

Meanwhile, following eight months of sustained growth in 2004, manufacturing activity has taken a downturn, StatsCan said.

In October, manufacturers reported fewer shipments for the second month in a row. Finished product inventories also continued to accumulate and fewer new orders were received.

StatsCan said Canadian manufacturers continued to face several challenges in October and signs suggest momentum has slowed.

Major factors contributing to thereduced activity included the rising value of the Canadian dollar, which reached a 12-year high in late October, and the price of crude oil, which exceeded US$55 per barrel during the month.

Manufacturing shipments dropped 1.3% to $49.8 billion in October, following September’s 0.7% decline. Shipments have now weakened 2.0% from the record level posted in August ($50.8 billion).

Although the recent declines have eroded some of the gains reported earlier in 2004, January-to-October shipments remain 8.0% higher compared with the same period last year. Shipments measured in constant dollars also declined for the second successive month in October, falling 0.5% to $46.5 billion.