Canadian exports fell for a third month in a row as the country’s trade deficit increased in August, Statistics Canada said Thursday.
The trade deficit came in at $3.4 billion for the month compared with a $3.0-billion deficit in July.
The increase came as overall exports slipped 1.0% to $43.6 billion in August. Export volumes fell 1.9% for the month.
Imports were virtually unchanged in August at $47 billion.
“In case there was any doubt that peak Canadian growth is behind us, this report all but cements the case,” Bank of Montreal senior economist Robert Kavcic wrote in a report.
The Canadian economy roared through the first six months of the year. The strength helped prompt the Bank of Canada to raise its key interest rate target twice; however, the pace of growth is expected to slow in the second half of the year.
Kavcic said the trade results were “another argument for the Bank of Canada to take a breather.”
The larger trade deficit came as exports of consumer goods and basic and industrial chemical, plastic and rubber products, as well as metal ores and non-metallic minerals moved lower. Exports excluding energy products were down 1.4%.
Meanwhile, imports of motor vehicles and parts climbed 2.5% to $9.3 billion, while metal ores and non-metallic minerals rose 9.9% to $1.2 billion.
Imports of consumer goods fell 1.8% to $10.1 billion.
TD Bank economist Dina Ignjatovic said, going forward, a healthy U.S. economy should help to prop up demand for Canadian-made goods, supporting export volumes.
“However, the appreciation of the loonie since early-September has somewhat reduced the competitiveness of Canadian exporters and could provide some offset,” Ignjatovic wrote in a note to clients.
“The outcome of the NAFTA renegotiations also poses some risk, but with negotiations moving slowly, it is unlikely to impact trade this year.”
Canada’s trade surplus with the United States narrowed to $2.3 billion in August compared with $3.2 billion in July as the Canadian dollar strengthened relative to the U.S. currency.
The country’s trade deficit with countries other than the United States slipped to $5.7 billion in August compared with $6.2 billion in July.