Trade deficit shrinks to $753 million

A spike in exports helped push Canada's trade deficit down to $753 million in July, almost half the level it was at a month earlier.

Statistics Canada said Thursday that exports rose by 2.2. per cent during the month. That more than outpaced the 0.5 per cent increase in imports.

Exports increased across the board to $37.3 billion. But much of the gain came from simply shipping more things, not necessarily more expensive ones. Overall volumes rose 4.1 per cent, while prices declined 1.9 per cent.

The trend was in the other direction on the import side, where the total value increased slightly to $38 billion. Prices increased 0.9 per cent, while volumes decreased by 0.4 per cent.

Canada's data agency reports that Canada shipped $800 million worth of goods to Japan during the month. That's comparable to the level of trade we saw before the earthquake and tsunami struck the country in March.

Though Canada has a trade deficit with the rest of the world, the country maintained its trade surplus with the United States in July, although it contracted slightly to $3.4 billion from $3.5 billion the month before.

Imports from the U.S. rose 3.1 per cent to $23.6 billion while exports increased 2.1 per cent to $27 billion.

"The clock is now zeroed on the debate over whether that is now sustainable going forward," Scotiabank economists Derek Holt and Karen Cordes Woods said in a note.