The country ran a rare trade surplus on C$762 million ($582 million) in May. It’s only the fourth surplus for the country since oil prices began declining in 2014, driven by a 4.6% increase in exports.

Economists had been anticipating the trade gap would actually widen in May to C$1.7 billion. Exports to the U.S. rose 3.7% to a record C$39.3 billion, increasing Canada’s trade surplus with its biggest trading partner to C$5.9 billion — the largest since October 2008.

The Canadian dollar extended gains after the report, trading 0.1% higher at C$1.3087 per U.S. dollar at 8:37 a.m. in Toronto.

Key Insights

• After a difficult end to 2018, Canadian exports are showing signs of renewed strength that will be needed for the economy to maintain its momentum going forward. Wednesday’s report from Statistics Canada is one more in a long list of recent data that suggest growth rebounded strongly in the second quarter, easing pressure on the Bank of Canada to follow any easing trend globally.
• The export gain in May comes on the heels of other strong gains, bringing the increase in merchandise shipments to 15% since December. That’s the biggest five-month gain in Canadian exports since 2008.
• The data suggest the trade sector is poised to make a major contribution to growth in the second quarter. Export volumes – – the variable that goes into calculations of real growth — were up 4% in May, the biggest gain since Augusts 2016. That follows a 1.1% gain in April. Import volumes — which are subtracted from growth calculations — were up just 1.2%, after a 1.6% decline in April.

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• The trade gap in April was revised slightly higher to C$1.1 billion from an initially reported C$1 billion gap. But the March trade deficit was revised down to C$2 billion, from an initial C$2.3 billion.
• Nine of 11 sectors tracked by Statistics Canada recorded an increase in exports, led by a 12.4% jump in motor vehicle production. The pick-up in car exports reflected the resumption of activity after plant shutdowns a month earlier.
• Another big contribution came from the aircraft sector, which was up 33% in the month.
• Shipments of energy products rose 5% in May, driven by crude oil and a surge in exports of refined products.