Canada’s merchandise trade surplus fell by nearly $300 million to $5.2 billion in December, Statistics Canada said today.

The agency said exports finished 2004 on a positive note, reporting 2.6% growth over November.

However, imports also rose in December, up 4.0% to $31.3 billion over November’s revised $30.1 billion, led by strong increases in automotive and machinery and equipment products.

The increase in the value of imports was partly caused by a drop in the exchange rate of the Canadian dollar.

“In December, the Canadian dollar’s appreciation levelled off from its peak of 85 cents US in November to settle between 81 cents US and 83 cents US,” Statistics Canada said. “If the exchange rate effect is removed, the increase in imports is closer to 2.7%.”

Canada’s trade surplus with its top trading partner, the United States, contracted to $8.8 billion in December. Imports from the United States rose nearly $1.5 billion to $21.4 billion, while exports to the U.S. were up by $1 billion to $30.2 billion.

For all of 2004, Canada’s overall trade surplus was $67.2 billion. Canadian companies exported $430.4 billion in goods, up 7.6% over 2003. Total imports rose 6.2% to $363.1 billion.