Canada’s merchandise trade surplus hit a six-month high of $5.1 billion in October, which surprised analysts to the upside.

Exports rose 0.9% following a similar gain in the previous month, led by rising prices of energy products like natural gas and crude oil. Imports advanced 0.3% in the month, led by crude oil and metals, notes Bank of Montreal. “In real terms, Canada’s trade surplus shrank in October from September, though it was up slightly from the third quarter. This suggests that trade will add modestly to GDP growth in the fourth quarter. We continue to monitor growth of 2.5% – 3% annualized in the current quarter, though the risk may be at the upper end of the range.”

TD Bank says, “The recent struggles of the U.S. economy are starting to gnaw away at Canada’s export performance, but so far the damage looks more like a nibble than a bite.” It notes that the upward trend in Canadian export values remains intact, but says the details of the report presented a cloudier picture than the headline numbers would suggest.

“The closing months of the year are going to be a hard grind for Canada’s export sector,” TD predicts. “With the U.S. economy running through a rough spot in the final quarter of the year, the weakness on the export side — though probably short-lived — is likely to continue to build over the near term.”

“With real trade flows relatively tame, today’s increase in the nominal trade surplus has more immediate implications for the Q4 current account balance,” offers CIBC World Markets. “The trade surplus averaged $4.5 billion in Q3, suggesting the current account could see notable further improvement if today’s gain is maintained. But exporters will need to contend with still-shaky stateside demand in the months ahead. Although US manufacturing output halted a brief string of losses in November, the sales outlook remains cloudy.”

BMO Nesbitt Burns concludes that the report represents, “Another solid trade result for Canada, even as U.S. activity slipped over the Fall. Impressive resiliency, and yet another sign that the Canadian dollar is fundamentally undervalued.”