By Leah Schnurr
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,
surpassing the C$1.20 billion deficit economists had forecast.
Revisions showed a bigger deficit for July.
Exports dropped 3.6 percent, the biggest decline since
January 2012 as exports of energy products tumbled. 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 2015, although economists and policymakers expect
growth will regain momentum in the second half.
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.
Still, he added, "whether that momentum can be sustained
into the fourth quarter remains an open question."
Indeed, the International Monetary Fund lowered its growth
projection for Canada to 1.0 percent this year, a tad lower than
the Bank of Canada's 1.1 percent forecast.
The IMF is less optimistic about growth in 2016, cutting its
outlook to 1.7 percent from 2.1 percent. The Bank of Canada sees
2.3 percent growth next year, although it will release updated
projections on Oct. 21.
The Canadian dollar weakened to a session low against the
greenback shortly after the trade data before strengthening.
CAD/
Exports to the United States decreased 3.0 percent and
Canada's trade surplus with the United States narrowed to C$2.9
billion.
A separate poll released on Tuesday showed nearly one in six
Canadians would be overburdened by a C$500 increase in their
monthly mortgage payments, highlighting concerns about whether
homeowners have taken on too much debt. ID:nL1N1261FD
($1=$1.3107 Canadian)
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic - Canada economic dashboard: http://graphics.thomsonreuters.com/15/sc-canada/index.html
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Editing by Dan Grebler)