Rising exports narrow Canada's trade deficit

Canada's exports were 3.5 per cent higherin September, narrowing the trade deficit to $927 million from $2 billion.

Statistics Canadasays exports rose by $1 billion to $30.3 billion in September, as volumes increased 4.5 per cent. Imports were largely unchanged, edging down0.1 per centto$31.2billion.

Exports have been on a downward trend since July 2008 and reached a low point in May 2009 before increasing in three of the past four months.

Automotive products, industrial goods and materials, and machinery and equipment were the main sources of growth for exports. Energy products mitigated the gains.

Higher exports to the European Union were largely responsible for the overall increase in exports.

"The big story in this report was Canadas diversification away from the United States," BMO economist Benjamin Reitzes said.

Exports to the EU and other OECD countries jumped 34 per centand 15 per centrespectively, he noted. "As U.S. consumption is likely to lag the global recovery, a shift towards other markets will be a key to Canadian exporters success," he said.

Exports to the United States increased0.5 per centwhile imports grew1.7 per cent. As a result, Canada's trade surplus with its largest trading partner shrank to$2.1billion in September from$2.3billion in August.

"With the U.S. still Canadas largest customer, trade deficits are likely to persist," Reitzes said.