Canada’s international merchandise trade balance with the world narrowed in October to $3.8 billion from $4.3 billion in September, Statistics Canada said Thursday.

This marked the second consecutive monthly contraction as imports grew more than exports.

Both imports and exports both increased in current dollars in October, but when measured in constant dollars, both declined.

The trade numbers were distorted by the biggest monthly depreciation ever in the Canadian dollar, Statscan pointed out. Imports, in particular, were inflated by a 10.7% decline in the value of the Canadian dollar vis-à-vis the U.S. dollar during the month and by a sharp fall in energy, food and industrial material commodity prices on world markets.

The exchange rate decline was the largest such decrease in a single month in recorded history, StatsCan said.

The immediate effect of the currency depreciation on imports was to increase substantially the price of imported goods from the United States. The effect was slightly moderated by the fall in commodity prices.

For exports, given the dominant role of commodities such as petroleum and gas, metals and minerals and grains, which tend to be priced in US dollars, the price increase was much less, StatsCan said.

Overall, import and export prices rose 8% and 4.2% respectively in October.

In current dollars, imports increased 4.1% to $39.7 billion, as they rose in all sectors except automotive products. It was the sixth increase in seven months. In constant dollar terms, imports fell 3.6%.

The value of exports in current dollars rose 2.5% to $43.5 billion following two months of decline. All sectors except automotive products contributed to the gain. In constant dollar terms, exports fell 1.6%.

The growth in imports from the United States surpassed the growth in exports by over $900 million in October. Consequently, Canada’s trade surplus with the United States continued to narrow for the fourth month in a row, totalling $7.3 billion.

Meanwhile, Canada’s trade deficit with countries other than the United States narrowed to $3.5 billion as exports to these countries grew more rapidly than imports, largely due to a rise in petroleum and coal products as well as precious metals to the European Union.

South of the border, the U.S. trade deficit unexpectedly widened in October, rising for the first time in three months as a record increase in quantity of oil imported offset falling oil prices and plunging car purchases.

The U.S. deficit in international trade of goods and services rose by 1.1% to US$57.19 billion from September’s revised US$56.56 billion, the U.S. Commerce Department said.

IE