Exports and imports dropped in December amid a global economic downturn, resulting in a trade deficit of $458 million compared with a trade surplus of $1.2 billion in November, Statistics Canada said Wednesday.

This was Canada’s first monthly trade deficit since March 1976, StatsCan said.

Canadian exports dropped 9.7% — the largest one-month percentage decline since October 1982 — to $35.3 billion as volumes and prices for goods shipped out of the country both fell.

Imports for December fell 5.7% to $35.8 billion.

The decline reflects the deteriorating economic environment around the world, according to CIBC World Markets economist Avery Shenfeld.

“Steep declines in the real volumes of both imports and exports are simply a mirror image of declines in real GDP at home and abroad,” Shenfeld said.

Canada’s trade surplus with the economically battered United States, the country’s top trading partner, fell to its lowest level since December 1998.

The surplus with the U.S. retreated to $3.8 billion in December from $4.6 billion in November.

Exports to the United States dropped 10% in December to $25.9 billion, while imports from the U.S. fell by 8.4%.

Canadian trade deficits will likely continue until the U.S. economy recovers, according to BMO Capital Markets economist Douglas Porter.

“Canada’s trade position has feasted for decades on a backdrop of ravenous U.S. demand. With that appetite now on the strictest diet imaginable, our trade outlook has withered accordingly,” Porter said.

Canada’s trade deficit with countries other than the United States grew to $4.2 billion in December, from $3.4 billion in November, as exports decline 9% while imports fell 1%.

South of the border, the U.S. trade deficit narrowed 4.0% in December to US$39.93 billion, the smallest gap in nearly six years, as exports and imports both declined.

The disappointing data is unlikely to have a significant impact on stock markets, according to Shenfeld.

“Markets are becoming almost deaf to horrible economic data by now, having written off the next few months,” he said.

IE