By Julie Gordon
OTTAWA (Reuters) -Canada's exports fell for the second straight month in August, largely driven by lower crude oil prices, with imports also declining, resulting in the smallest trade surplus of the year, Statistics Canada said on Wednesday.
The country's trade surplus with the world narrowed to C$1.52 billion ($1.12 billion) in August, well below analyst forecasts of a surplus of C$3.45 billion, and down from a revised C$2.37 billion in July.
"So not a great month," said Stuart Bergman, chief economist at Export Development Canada. "Exports were down almost 3% ... so second straight decline after six months of growth, potentially signaling a bit of an inflection point."
Exports fell 2.9% in August and dropped 1.3% on a volume basis, the data showed, with export prices down for the third consecutive month.
Energy products led the declines, largely on lower crude oil prices, while exports of wheat also fell sharply, a residual effect of last year's drought.
"Looking ahead, a stabilization in oil prices and prospects for agricultural exports to drive some growth later in the year should see the goods surplus remain modestly in positive territory," Andrew Grantham, senior economist at CIBC (TSX:CM) Capital Markets, said in a note.
Grantham added that travel still has room to recover, which should continue to widen the services deficit.
And more spending on travel may also weigh on the goods trade, economists said, as Canadian spending shifts away from consumer goods.
On the import side, the 1.7% decline was driven by motor vehicles and parts. Statscan noted that while auto production usually rebounds in August from July, when Canadian auto makers traditionally have maintenance shutdowns, industry patterns continue to be impacted by supply chain issues.
The Canadian dollar was trading 1.3% lower at 1.3690 per U.S. dollar, or 73.05 U.S. cents, as the greenback rallied against a basket of major currencies.