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July 13, 2005    

Canada trade surplus drops

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by Brian Turner
Canada trade surplus drops

Canada’s trade surplus dropped to C$4.0 billion in May, well below the expected figure of C$4.9 billion.

Statistics Canada said that the unexpected drop had to do with higher energy imports and the importation of heavy equipment to cope with a higher construction rates in western Canada.

Imports of machinery and heavy equipment was up by 0.3 percent in May, while imports of energy products was up by 19.0 percent on higher demand by refineries in the east.

In addition, exports were down by 0.5 percent. Machinery and equipment exports were down by 1.9 percent and energy exports fell by 4.9 percent.

The only sectors in which exports did not drop were the automotive products and consumer goods sectors. Exports of automotive products rose by 4.9 percent.

Analysts said that the news does not alter the near-certainty that the Bank of Canada will raise interest rates in September.

The bank had announced on Tuesday that it was leaving rates at their current level this month, but that rate raises would be needed soon.

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