Statistics Canada said Thursday the country's trade deficit dropped to $237 million in January compared with $332 million in December.
"The improvement in the trade picture, small as it may be, is an important first step for the Canadian economy this year," TD Bank economist Francis Fong wrote in a report.
"After an undeniably weak 2012, exports are going to be increasingly looked to as a driver of growth given that households and government are expected to moderate spending this year."
Exports rose to $39.1 billion for the month as crude oil and bitumen as well as unwrought precious metals and precious metal alloys both posted gains, offset by lower auto exports. Meanwhile, imports grew to $39.3 billion due to energy products, metal ores and non-metallic minerals.
Canada's trade surplus with the United States increased to $4.3 billion from $4.0 billion in December, boosted by crude oil and bitumen exports.
The country's trade deficit with the rest of the world totalled $4.5 billion in January compared with $4.4 billion in December.
The improved trade picture came as Statistics Canada also said $5.8 billion in building permits were issued in January, up 1.7 per cent from December, boosted by improvements in every province except Alberta and Quebec.
Residential permits were up 17.6 per cent in January to $3.8 billion, following six consecutive months of decline, while the non-residential sector fell 19.2 per cent to $2 billion, following a 7.8 per cent decrease the previous month.
Statistics Canada said while the increase in residential permits offset the decline in non-residential ones, the total value of building permits has been trending downwards since October 2012.
"This at least helps to quell fears of an utter collapse in new home building," said David Madani of Capital Economics.
However, Madani noted, the trend is not positive.
"We expect February's housing starts figures released on Friday to confirm this weakening trend," he said.Suggest a correction