(A(Adds details, quotes, market reaction))
OTTAWA, Oct 6 (Reuters) - Canadian exports fell by the most
in 3-1/2 years in August as cheaper commodity prices took a bite
out of the energy sector, although the data did not dispel
expectations that economic growth picked up in the third
quarter.
Canada's trade deficit widened to C$2.53 billion ($1.93
billion), data from Statistics Canada showed on Tuesday, handily
surpassing the C$1.20 billion deficit economists had forecast.
Revisions also showed a bigger deficit for July.
Exports dropped 3.6 percent, the biggest decline since
January 2012 as exports of energy products tumbled 14.7 percent.
The decline in the sector was almost entirely the result of
lower exports of crude oil and crude bitumen, the agency said.
Oil prices have fallen by more than half since last summer.
Prices for Canadian energy exports dropped in August, but
volumes increased by 2.0 percent.
The drop in oil prices put Canada in a mild recession in the
first half of the year, although economists and policymakers
expect growth will regain momentum in the second half of 2015.
Economists said the details of the report were not as soft
as the headline figure, pointing to a smaller decline in export
volumes. It also reinforced expectations the Bank of Canada will
hold interest rates steady when it meets later this month after
two cuts earlier this year.
"This report reinforces our belief that growth will be solid
in the third quarter, with trade providing a big boost,"
Benjamin Reitzes, senior economist at BMO Capital Markets, wrote
in a note.
Even so, he added, "whether that momentum can be sustained
into the fourth quarter remains an open question."
The Canadian dollar weakened to a session low against the
greenback shortly after the trade data but began recouping
initial losses and edged higher as market participants digested
the details. CAD/
Exports of consumer goods fell 8.0 percent, while six of 11
export sectors declined. Overall imports inched up 0.2 percent,
the fourth straight month of increases.
Exports to the United States decreased 3.0 percent. Imports
from south of the border also declined and Canada's trade
surplus with the United States narrowed to C$2.9 billion from
C$3.7 billion in July.
($1=$1.3107 Canadian)
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Graphic - Canada economic dashboard: http://graphics.thomsonreuters.com/15/sc-canada/index.html
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