Trade deficit narrowed to $1.9B in August

Statistics Canada says the country's trade deficit for August declined unexpectedly to $1.9 billion as exports to countries other than the United States picked up.

The deficit for August compared with a revised figure for July that showed a deficit of $2.2 billion compared with the initial report of a deficit of $2.5 billion.

Economists had expected the August deficit would grow to $2.6 billion, according to Thomson Reuters.

TD Bank economist Dina Ignjatovic said that after a weak start to the year, exports appear to be moving in the right direction, albeit slowly.

"Still, the performance in July and August is better than that recorded in the second quarter," Ignjatovic wrote in a note to client.

"This, combined with softer import growth over the two month period, suggests that net trade will contribute positively to overall economic growth in the third quarter, which is tracking around three per cent."

Exports in August increased 0.6 per cent to $43.4 billion as volumes grew 0.4 per cent and prices added 0.2 per cent. Exports of consumer goods, metal and non-metallic mineral products and energy products drove the increase.

Meanwhile, Statistics Canada says imports were largely unchanged at $45.3 billion in August as volumes increased 0.8 per cent, but prices fell 0.7 per cent.

Higher imports of metal and non-metallic mineral products, consumer goods, and motor vehicles and parts were offset by lower imports of energy products.

Exports to countries other than the U.S. rose 7.7 per cent to $11.0 billion in August, while imports from countries other than the U.S. were up 0.3 per cent at $15.4 billion.

Exports to the U.S. fell 1.6 per cent to $32.4 billion, while imports from the U.S. fell 0.1 per cent to $29.9 billion.