(Adds reaction, details)
By David Ljunggren
OTTAWA, July 6 (Reuters) - The value of Canadian energy
exports surged in May even as the industry was coping with a
major Alberta wildfire, but improved oil sales were not enough
to prevent the second biggest trade deficit on record,
Statistics Canada data showed on Wednesday.
The C$3.28 billion ($2.52 billion) deficit, the 21st in a
row, was much larger than the C$2.70 billion shortfall predicted
by analysts in a Reuters poll. The record high was the revised
C$3.32 billion seen in April.
Exports fell by 0.7 percent as eight of 11 sub sectors
declined, reflecting the Canadian economy's continued challenges
as it tries to adjust to the prolonged and complex effects of an
oil price slump.
Yet even as wildfires in the energy-producing province of
Alberta forced the shutdown of several oil sands projects,
higher prices helped the value of energy exports rise by 7.1
percent, the highest month-on-month advance since May 2014. The
value of exports of crude oil and crude bitumen surged 10.5
percent.
Statscan said early evidence indicated that Canadian
refinery activity declined in May, freeing up crude oil supply
for export. It said the remaining shortfall was largely met by a
drawdown of Alberta inventories.
"It's almost counterintuitive. It's not what we were
expecting to see at all," said Peter Hall, chief economist at
Export Development Canada.
Hall said a particular concern was a 21.0 percent drop in
exports of unwrought precious metals and precious metal alloys,
largely due to weaker demand in Britain and China. The sector is
known for its volatility, he added.
Bank of Montreal chief economist Doug Porter said he was
surprised by the weakness in non-energy exports, given the
strong U.S. economy and a Canadian dollar that has slipped
against its U.S. counterpart.
"I don't think there's a single reason to explain why
exports have been disappointing," he said.
Imports dropped by 0.8 percent, in part due to lower imports
of aircraft and other transportation equipment and parts.
Exports to the United States, which accounted for 78.0
percent of Canada's global total in May, rose by 3.6 percent
while imports fell by 1.1 percent. As a result, Canada's trade
surplus with the U.S. widened to C$2.76 billion from C$1.31
billion in April.
The Bank of Canada, citing the wildfire impact, said last
month that growth was likely flat or slightly negative in the
second quarter. It sees an outsized third-quarter recovery.
($1=$1.30 Canadian)
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Graphic - Canada economic dashboard http://graphics.thomsonreuters.com/15/sc-canada/index.html
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