Canada's Trade Deficit Unexpectedly Widens on Auto Sector Bounce

(Bloomberg) -- Canada's trade deficit unexpectedly widened in November, as a restart of some auto production fueled imports. The higher deficit masked a gain in exports.

Imports surged 5.8 percent in November, the biggest increase since July 2009. The increase in shipments widened the deficit to C$2.5 billion from C$1.6 billion a month earlier, Statistics Canada said Friday.

While widening trade deficits can act as a drag on growth and be perceived as a vulnerability, rising imports may also reflect robust domestic demand. A rise in exports meanwhile -- up 3.7 percent in November -- also suggests Canada is beginning to break out of a slump in shipments to the rest of the world.

The increase in imports in November was led by a 5.4 percent jump in auto-related imports. Imports of motor vehicle engines and parts rebounded following planned shutdowns and work stoppages.

The 3.7 percent gain was the biggest monthly export gain since November 2016, and followed a 2.3 percent gain in October.

Exports in recent months had suffered one of their biggest tumbles ever, fueling concern the nation's currency accelerated too quickly earlier this year. A recent drop in the Canadian dollar though may be providing some relief.
In volume terms, adjusting for price changes, imports rose 5 percent in November. Export volumes were up 0.6 percent

--With assistance from Erik Hertzberg

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net.

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Greg Quinn

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