(Bloomberg) --
Canada's merchandise trade deficit widenedmore than forecast as crude oil prices tumbled, evidence thenation's economic expansion is being curbed by an energy slump.
Oil export prices dropped 15 percent in October and thevolumes shipped fell 0.9 percent, reducing total shipmentsabroad for a third straight month, Statistics Canada saidThursday from Ottawa. The trade deficit grew to C$1.17 billion($872 million), and the September shortfall was more thandoubled after a revision to C$891 million.
The oil pinch led the Bank of Canada to pare back optimismabout lifting interest rates to neutral at its latest decisionWednesday, and will likely dominate Prime Minister JustinTrudeau's talks this week with provincial leaders. Earlier thismonth, Alberta Premier Rachel Notley ordered oil producers tocut output by 8.7 percent starting in January after the discounton Western Canadian Select to U.S. benchmark prices widened to arecord $50 a barrel.
Economists at most major Canadian banks have cut economicgrowth forecasts for next year because of reduced oil revenueand investment. Some also predict Governor Stephen Poloz willrefrain from raising borrowing costs at the central bank's nextmeeting in January.
Exports had climbed to a record high in July even as theU.S. threatened to scrap the North American Free TradeAgreement, which along with unemployment near record lows hadbeen building the case for tighter monetary policy.
Other Details
- Crude oil exports fell 16 percent in October, the biggest decline since February 2016
- Total exports fell 1.2 percent, with a 4.4 percent gain in automobiles helping ease the energy losses
- Imports fell 0.6 percent, the fourth decline in five months. Energy showed up here as well with a 14 percent fall in crude oil diluents brought in from the U.S. Car and light truck imports also fell 5.8 percent
- Canada's trade surplus with the U.S. narrowed to C$3.1 billion from C$4.3 billion on the month, the smallest since March
- The volume of exports, which strip out price changes, rose 1.2 percent in October. Import volumes were little changed
- The higher September trade deficit came as crude oil exports were reduced, Statistics Canada said
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