Statistics Canada reported Thursday that the surplus fell to $292 million from January's negatively revised $1.9 billion, mostly due to a 3.9 per cent setback in exports to $39.6 billion.
The picture was not much better in terms of real volume of shipments, which showed exports fell 3.5 per cent.
"This is the second consecutive monthly decline in the volume of exports, so the trade impact on quarter one GDP (gross domestic product) growth is tracking negatively," said Derek Holt, vice-president of economics for Scotia Capital.
Still, analysts expect export trade will be a net positive for the first three months of this year — although less than previously expected — due to the strong hand-off from the end of 2011.
Analysts have been looking for modest expansion in the first quarter of just under two per cent, but Bank of Canada governor Mark Carney recently suggested that call may be revised upwards in next week's monetary policy review.
Other data has been mixed. Employment, in particular has gone from flat readings in January and February to a massive job creation number — 82,300 — in March, the last month of the quarter.
With consumers highly indebted, economists have been looking to exports and business investment in machinery and equipment to support the recovery.
February disappointed on both fronts.
Imports increased 0.2 per cent to $39.3 billion. Imports of machinery and equipment declined 2.1 per cent, however.
But analysts took the report with a grain of salt, saying the evidence points to February's performance being the result of unusual circumstances that are unlikely to repeat.
Export Development Canada economist Peter Hall said he was not concerned with the drop in exports.
Shipments of autos and related products plunged 11.9 per cent, while energy products fell 6.9 per cent as crude exports were down 6.4 per cent despite stronger global prices.
"I don't think we have too much to worry about here," Hall said.
"A warm winter in the United States is basically what is going on and we're walking into a driving season. So energy is going to pick up."
"On autos, I scratch my head a little bit," Hall added. "But the U.S. sales levels are well up in March and production forecasts are still up at double-digit sales. This is a breather."
TD Bank economist Dina Cover agreed, saying despite the challenges of the strong dollar, shipments to the United States — Canada's number one customer — will likely improve along with the U.S. economy.
David Madani of Capital Economics added: "This improvement should help to support better export growth in the months ahead and we still think that net exports are on track to contribute positively to GDP in 2012."
However, there appears to be a limit on the extent to which exports can contribute going forward, given the ongoing difficulties in Europe and moderating growth even in emerging economies such as China.
The World Trade Organization said Thursday it expects growth in global exports to slow to 3.7 per cent in 2012, from five per cent in 2011 and 13.8 per cent in 2010, when the world was emerging from recession.
In February, the trade surplus with the United States fell to $4.8 billion from $6.1 billion as exports fell 3.8 per cent to $29.3 billion.
Exports to countries other than the United States fell four per cent to $10.3 billion as the country's trade deficit with the rest of the world rose to $4.5 billion from $4.1 billion in January.
An unrelated report from the Conference Board gave more evidence of the slow growth economy. The think-tank said its leading indicator of corporate profitability remained flat in March, virtually unchanged from where it stood in November.
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