Statistics Canada said Friday that the value of February exports rose 0.4 per cent from the prior month to $43.5 billion and imports fell 0.7 per cent to $44.5 billion.
However, the improvement was largely due to prices as export volumes fell 3.3 per cent and import volumes slipped 1.7 per cent.
The federal agency also reduced its January deficit estimate to $1.5 billion, from the $2.5 billion reported earlier, as estimates of energy exports and some imports were replaced with updated data.
Economists had estimated the February trade deficit would be $2 billion, according to Thomson Reuters.
"February's trade numbers were certainly a welcome surprise, although it was largely a price story," TD Bank economist Dina Ignjatovic wrote in a note to clients.
"Incorporating today's report, along with other recent data releases, economic activity in the first quarter is likely to be flat."
February's exports rose in five of the of 11 sectors tracked, led by energy products, which rose 14.9 per cent, on a 17.5 per cent increase in prices, to $8.8 billion on increases in crude oil and crude bitumen, natural gas and refined petroleum energy products.
The increase in energy exports was offset by a 15.1 per cent drop in exports of motor vehicles and parts to $5.9 billion.
Meanwhile, imports fell in seven of the 11 sectors.
Imports of motor vehicles and parts fell 4.7 per cent to $7.5 billion, while imports of industrial machinery, equipment and parts were down 4.3 per cent to $4.5 billion in February.
"While the large decline in export volumes could generate concerns going forward, the monthly data is notoriously volatile and revision prone and, even with the decline in February, export volumes are still 5.5 per cent above their year-ago level," Royal Bank economist Nathan Janzen wrote.
"We continue to expect non-energy exports in particular to benefit from stronger U.S. demand and a weaker Canadian dollar this year, which will provide a welcome source of offset to expected weakness in the energy sector."
Imports from the United States were down 1.2 per cent to $29.8 billion in February, while exports rose 1.1 per cent to $32.8 billion, widening Canada's trade surplus with that country to $2.9 billion in February from $2.2 billion in January.
Exports to other countries fell 1.5 per cent to $10.8 billion in February, while imports rose 0.3 per cent to $14.7 billion, widening the trade deficit with the rest of the world to $3.9 billion in February from $3.7 billion in January.Suggest a correction