Canada's trade deficit widens to $1.6B

Canada's trade deficit with the rest of the world grew to $1.6 billion in June as exports fell more than imports, Statistics Canada said Thursday.

Analysts had expected the deficit would be unchanged from May's $1 billion figure.

Drops in energy and automotive product exports were the main reasons behind the overall decline in exports, which fell 1.7 per cent to $36.5 billion.

Exports of energy products slumped 5.1 per cent to $8.7 billion in June. StatsCan said that was due tolower volumes of exports and lower prices.

"The headwinds facing Canadian exporters have clearly been too much: a persistently strong Canadian dollar, weak U.S. demand, and Japanese supply disruptions, to name a few," TD economist Francis Fong wrote in a commentary.

"The export sector is clearly in no position to take on the responsibility of being the major driver of growth going forward and it appears that economic growth in the coming quarters could be weaker than originally anticipated."

Merchandise imports fell just 0.2 per cent to $38 billion.

While Canada was in a deficit position with the rest of the world, it recorded atrade surplus with the United States. The surplus shrank slightly to$3.6 billion in June, down $100 million from May.

Canada's trade deficit with countries other than the U.S. hit a record$5.2 billion in June, up from May's $4.8 billion.

Also Thursday, the U.S. Commerce Department reported that the U.S. trade deficitrose 4.4 per cent to $53.1 billion US in June. That's the largest trade imbalance since October 2008.