Continued export weakness and a slight rise in import resulted in Canada’s merchandise trade surplus declining in November for the second straight month, Statistics Canada said today.

Companies exported $32.1 billion in merchandise, down 1.1% from October, while importing goods worth $27.8 billion, up 1.7%.

The trade surplus fell from more than $5.1 billion in October to just over $4.3 billion in November.

“A strong Canadian dollar appears to be exerting some downward pressure on export prices, which have fallen 8.4% cent over the last year, as the exporting community adjusts to its valuation,” Stats Can said.

Canada’s three largest export sectors – machinery and equipment, auto parts and industrial products – all declined in November. All other sectors increased.

Canada’s exports to the United States were $26.4 billion in November, down only 0.1% from October — the third monthly decline in the last four months. Imports from south of the border were up 1.6% , resulting in a $334-million decline in Canada’s trade surplus with the United States to just over $6.9 billion.

“This morning’s merchandise trade report left little doubt that the stronger Canadian dollar is keeping Canada’s export sector stuck deep in the quicksand — and certainly provides one more reason to expect the Bank of Canada to deliver an interest-rate cut at next Tuesday’s Fixed Announcement Date,” notes TD Bank.

“The Bank of Canada’s January 20 rate setting remains a close call. A rate cut is well justified, but we lean slightly towards a March cut, as Q4 growth remains on track for a sturdy performance and little slack is currently evident in labour markets” says CIBC World Markets.