Canada swings to $885M trade deficit

Merchandise exports declined three per cent and imports rose 1.9 in October, as Canada's trade balance slipped back into deficit.

Statistics Canada reports the country's trade balance with the world fell into a deficit of $885 million in October from a surplus of $1 billion in September.

The agency says exports decreased to $38.4 billion in October, as both prices and volumes fell.

Industrial goods and materials, and energy products sectors led the decline, while automotive products was the only sector to record a gain during the month.

Imports reached a record high of $39.3 billion, as volumes increased 1.3 per cent, led by machinery and equipment, followed by energy and automotive products.

Imports from the United States rose three per cent to $24.5 billion, their highest value since October 2008, while exports fell 0.9 per cent to $27.6 billion.

As a result, Canada's trade surplus with the United States narrowed to $3.1 billion in October from $4.1 billion in September.

Exports to countries other than the United States fell 7.9 per cent to $10.8 billion. Imports from countries other than the United States edged up 0.1 per cent to $14.7 billion.

Canada's trade deficit with countries other than the United States increased to $4 billion in October from $3 billion.

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Federal deficit hits $1.6B in July

The federal budget deficit in July rose to $1.6 billion, compared with $0.5 billion in the same month a year earlier, the Finance Department reported Friday.

So far this fiscal year, spending has surpassed revenue by $7.1 billion, compared with $7.7 billion in the first four fiscal months of 2010.

“Revenues and expenditures are in line with expectations made at the time of the June budget,” Sonya Gulati, an economist with TD Bank said in a commentary. "The federal government appears to be on track to meet its $33.2-billion deficit projection for the current fiscal year.”

Many economists have lowered their predictions for Canadian growth this year, said Gulati, but Ottawa’s lower budget estimate for economic growth than the markets had earlier predicted “gives the fiscal plan a bit of breathing room,” she said.

“However, if uncertainty on the global stage were to amplify, the government would be hard-pressed to meet medium-term deficit targets.”

The deficit numbers were released a day after Parliament's budget watchdog, Kevin Page, warned that an aging population and other factors mean the country's finances are not sustainable over the long term.

Page warned that debt can't continue to grow faster than the economy, meaning the government either has to raise taxes, reduce overall program spending, or deliver a combination of the two.

Revenues in July fell by $0.2 billion, or 1.1 per cent. Revenue from personal income taxes rose by $0.7 billion, or 6.7 per cent, while corporate income tax collections fell by $0.3 billion, or 12.8 per cent.

Program spending rose $0.8 billion, or 4.3 per cent. Transfers to the provinces and other levels of government increased by $1.1 billion, or 24.4 per cent.

The cost of servicing the debt rose by $0.1 billion.

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Canada's travel deficit widens

The gap between what Canadians spend abroad and what tourists spend in Canada widened in the second quarter of 2011, to $3.9 billion.

That was a 3.1 per cent increase from the previous quarter, Statistics Canada said.

Americans took fewer trips to Canadian tourist destinations last quarter. CBC

Canadians spent $8 billion abroad in the April-to-June period. That was an increase of 4.4 per cent. At the same, foreign tourists spent $4.1 billion in Canada, a 5.7 per cent gain. That was the largest quarterly advance since the first three months of 2004.

Much of the deficit consisted of the gap between Canadian and U.S. travelers to each others' countries. Canadians spent $4.8 billion in the United States during the period, while American tourists spent $1.8 billion here — a total deficit of $3 billion.

The Canadian dollar gained 1.8 per cent on the U.S. dollar during the time frame, to an average value of $1.03 US.

Spending by Canadians in countries that aren't the United States was up five per cent to a new high of $3.2 billion in the second quarter. The number of trips Canadians took to overseas countries increased to its highest level since record keeping began in 1972 during the period.

Meanwhile, travelers from overseas countries spent $2.3 billion in Canada in the second quarter, up 5.7 per cent. This was the strongest increase since the fourth quarter of 2007.

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