Canada’s economy showed some surprising resilience in the face of newly minted U.S. tariffs on Canadian steel and aluminum industries with strong export growth in most other sectors softening the blow of those new duties.
Exports rose 4.1 per cent to $50.7 billion in June, surpassing for the first time the $50 billion mark, Statistics Canada reported Friday.
Exports to countries other than the United States increased 8.7 per cent in June to a record $13.6 billion.
The surge in exports was led by energy products, and aircraft and other transportation equipment and parts. Excluding energy products, exports were up 3.4 per cent. Compared with the same time last year total exports rose 9.2 per cent.
At the same time, the country’s trade deficit shrank dramatically to $0.6 billion in June from $2.7 billion in May, a much better outcome than markets expected.
“Today’s report is the latest in a string of upside surprises that include May’s GDP data and June inflation numbers,” RBC senior economist Josh Nye wrote in a note to clients.
“Exports are key to the Bank of Canada’s forecast for sustained GDP growth over the coming year, so June’s data will certainly please them.”
The latest numbers add to the case for the Bank of Canada to raise rates again in the near-term, Nye said, adding that he expects the central bank to continue its gradual approach to increasing the interest rates.
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