Statistics Canada reported Tuesday that the country’s trade deficit was an estimated $1.1-billion in the month, the smallest in nine months, down from the record $4.4-billion in September (revised from an originally reported $4.1-billion). The deficit was smaller than economists’ consensus expectation of $1.7-billion.

But the massive September trade gap was largely the result of the arrival during that month of a single import: A huge module for the Hebron offshore oil platform, shipped from South Korea, valued at about $3-billion. In the absence of this big one-time shipment, imports fell back 6.3 per cent in October, including a massive 42-per-cent plunge in the industrial-machinery-and-equipment category.

Statscan said that without the Hebron-related spike in machinery and equipment imports in September, the trade deficit that month would have been more like $1.5-billion, which would have been the narrowest since January. The even narrower October figure continued the gradual improvement in Canada’s trade balance since the middle of the year, when weak exports and the impact of the Alberta wildfires had caused the deficits to swell.

But while overall exports rose 0.5 per cent in the month, due to stronger prices, the volume of exports – a critical indicator of demand for Canadian goods in foreign markets, and a key driver of gross domestic product growth – slipped 0.7 per cent, their second straight month-to-month decline. The export volume numbers suggest that after the strong rebound during the summer from the wildfire-induced slump, Canada’s exports are again struggling to find traction, amid a generally challenged global trade environment.

“Stripping out some of the noise in the report, the news wasn’t particularly constructive for the Canadian outlook,” said Canadian Imperial Bank of Commerce economist Nick Exarhos in a research report. “Export volumes continue to track year-on-year declines, while imports – a barometer for internal demand – remain anemic.”

Rest at http://www.theglobeandmail.com/report-on-business/economy/canadas-trade-gap-narrows-as-imports-sink/article33213079/