Canada’s trade balance dropped from just under $4.6 billion in May to $3.8 billion in June, in the wake of a decline in exports and an increase in imports, reports Statistics Canada The trade surplus with the United States alone plunged $587 million.

Exports of forestry products plummeted, as lumber exports recorded their largest monthly decline ever, down to levels recorded almost 10 years ago. This decrease more than offset export gains in other sectors.

Imports rose briskly, fuelled by solid growth in the machinery and equipment, consumer goods and industrial goods and materials sectors. This resulted in a drop in Canada’s merchandise trade surplus of more than three-quarters of a billion dollars, down to its lowest level since December 1999.

Overall, exports dipped 0.5% to $33.6 billion with levels falling for the United States and Japan. Exports to all other principal trading areas increased.

Merchandise imports, however, continued to grow, rising 2.1% to $29.8 billion, roughly the same rate of growth as the previous two months combined. The most pronounced increase in imports was for merchandise from the European Union, which rose 16.4% to $3.4 billion.

StatsCan says the merchandise trade surplus has fallen $1.5 billion in the past two months and has declined eight times in the past 12 months. The trade balance at the end of the first two quarters of 2002 stood at $27.6 billion, a drop of over $10.6 billion from the same six-month period of 2001.