The trade surplus rose slightly from the previous month to $351 — lower than the $500 million expected — due to the fact that imports fell more than exports, Statistics Canada said Thursday.
In terms of value, imports declined 0.6 per cent to $39.1 billion while exports slipped 0.4 per cent to $39.5 billion.
But the good news was that the loss was due to price effects. In volume terms, as exports rose almost one per cent and imports were up 0.6 per cent higher.
Economists had expected a bigger snap-back from February's weak data, but they pointed out that given the positive inflation-adjusted numbers and the strong hand-off from the final months of 2011, trade will be a net contributor to economic growth in the first quarter.
"In real terms, trade is likely to contribute strongly to Canada’s economic growth for the first quarter. Exports were up 10.1 per cent at annual rates compared to a 5.3 per cent increase in imports," said Jacques Marcil, a senior economist with the TD Bank.
Exports remain a key component of the economy, representing slightly more than 30 per cent of gross domestic output.
Analysts also expect the near-term outlook for future exports to improve, given strong sales expectations for autos in the United States.
Export Development Canada chief economist Peter Hall said he was not discouraged by the March report, even though, on the surface, the numbers appear poor.
"The bottom line looks really bad until you take away crude oil. We got slammed by crude oil, take that away and we're actually seeing a 2.7 per cent increase in nominal terms," he said.
"We've got industrial goods that were up, machinery and equipment was up and automotive hung in there and is still 12 per cent up on the year."
And with the summer driving season approaching, demand for crude oil should rebound, Hall said.
In March, exports to the United States — Canada's biggest market — fell 2.1 per cent to $28.7 billion, the third consecutive monthly decrease.
Meanwhile, imports from the U.S. declined 1.4 per cent to $24.1 billion as Canada's trade surplus with the Americans decreased to $4.6 billion in March from $4.9 billion in February.
Exports to countries other than the United States rose 4.5 per cent to $10.8 billion and imports increased 0.8 per cent to $15.1 billion, narrowing the trade deficit with those countries to $4.3 billion from $4.6 billion in February.
By sectors, energy exports fell 8.9 per cent compared with February as crude petroleum exports plunged 15.7 per cent. In volume terms, the setback was less severe.
Auto exports slipped slightly by 0.7 per cent, after February’s 11.3 per cent crash.
But many other industries posted gains. Industrial goods and materials rose 6.2 per cent, machinery and equipment was up 3.4 per cent and other consumer goods rebounded by almost 12 per cent.
South of the border, the U.S. trade picture suggested the economy was improving with both exports and imports posting gains in March.
Although the U.S. trade deficit widened, Global Insight economist Gregory Daco said the rebound in imports pointed to "sustained domestic activity" pulling in goods from abroad.
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