The Canadian merchandise trade surplus beat expectations in April, jumping 11% to $5.2 billionl, the highest level since May 2001. Merchandise exports rose 2.9% to $34.3 billion, the highest level since June 2001.

During April, exports grew 2.9%, led by a 4.1% jump in autos. BMO Nesbitt Burns says, “Shipments of vehicles and parts posted solid gains in order to help satisfy U.S. consumers’ incentive-driven demand for cars and trucks. As a result, the U.S. accounted for two-thirds of the rise in exports. Only energy exports fell during the month, weighed down by warmer weather and a drop in natural gas prices.”

“The U.S. economy may be struggling to fully take flight, but you wouldn’t know it by looking at this morning’s Canadian merchandise trade data,” says TD Bank. “Canada’s strong export performance is likely to continue through the remainder of the year. While the U.S. recovery may be wanting, export growth will remain in positive territory unless the U.S. economy slips back into recession, which is not likely.”

BMO notes that imports also rose, gaining 1.6% in the month, also keyed by the auto sector. The Canadian economic rebound and the strength of domestic demand is contributing to the widening of the trade balance deficits with the non-U.S. trading partners.

TD concludes, “All told, this morning’s trade data adds yet another brushstroke to the strong second-quarter picture that has been rapidly building since the beginning of the week. Not only would this be bullish for the Canadian dollar in its own right, but it reinforces our view that the Bank of Canada will be raising interest rates in the months ahead, notwithstanding the U.S. Federal Reserve’s wait-and-see approach.”