09/11/2012 11:26 EDT

Canada Trade Deficit Hits Record High In July, 2012


Canada’s trade deficit with the rest of the world rose to an all-time record high in July, Statistics Canada data shows.

Canada bought $2.3 billion more from foreign countries than it sold to them in July, as exports fell 3.4 per cent from the previous month. Imports also fell, but by a smaller 2.2. per cent, meaning the overall trade deficit grew wider.

The trend went against analysts’ predictions, who expected a slight narrowing of the deficit.

"It’s never encouraging to see a deteriorating trade balance, but it’s really bad news when the worsening is sparked by falling two-way trade," CIBC analyst Emanuella Enenajor said in a client note Tuesday morning.

TD Bank economist Leslie Preston suggested the weak number for energy exports — they fell 8.5 per cent during the month — are a little "suspicious," and predicted a bounce-back in August.

"However, that does not account for the weakness seen in other non-energy categories. There is really little to be positive about in today’s report," Preston wrote.

Exports to the United States fell 5.0 per cent to $27.4 billion in July, while imports declined 2.1 per cent to $25.3 billion.

The trade surplus with the United States decreased to $2.1 billion in July from $3 billion in June, the smallest surplus since October 2010.

Imports from countries other than the United States decreased 2.4 per cent to $14.7 billion in July while exports rose 1.2 per cent to $10.3 billion leaving the trade deficit at $4.4 billion, down from $4.9 billion in June.

With files from The Canadian Press

Also on HuffPost

Photo gallery World's Most Competitive Economies See Gallery