OTTAWA, March 12 (Reuters) - Canada's trade deficit in January surprisingly widened as exports dropped more than imports led by a meaningful drop in shipments of motor vehicle and parts, data showed on Thursday.
Statistics Canada said the country posted a deficit of C$3.65 billion ($2.69 billion) in January, almost three times more than the deficit of C$1.3 billion observed in December.
Analysts polled by Reuters had forecast a C$900 million deficit for the month.
Canada's international merchandise
trade is heavily skewed to the United States, its biggest trading partner. Both exports and imports to the U.S. dropped in January, with the U.S. accounting for 68% of Canada's total exports.
Total exports dropped by 4.7% in January, registering its largest drop since April last year. Exports declined in six out of 11 categories, StatsCan said.
In volume terms exports declined 5.8%, it said.
Exports of motor vehicle and parts dropped to its lowest level since September 2021, posting a massive 21.2% drop in January. This was mainly due to lower motor vehicle production in Canada due to prolonged seasonal production stoppages, the statistics agency said.
Exports of metal and non-metallic mineral products dropped by 8% in January primarily led by lower exports of unwrought gold to the United Kingdom.
Higher energy exports, which rose by 4.1%, helped offset some of the decline. This is Canada's biggest export category by value and contributes close to one-fourth of its total exports.
Economists have said that Canada's international trade could benefit in the coming months due to higher crude oil prices owing the war in the Middle East.
Exports to the U.S. decreased 3.8% and imports dropped by 3.4%, shrinking Canada's trade surplus with its neighbor to C$5.4 billion in January, modestly lower than C$5.7 billion seen in the prior month.
Exports to countries other than the U.S. dropped 6.5% in January after reaching a record high in December. The decline was mainly due to a drop in unwrought gold exports to the U.K.
Imports from countries other than the United States increased 2.1% in January, due in part to higher imports of industrial machinery from China, StatsCan said.
Canada's total imports dropped by 1.1% in January with decreases in seven out of 11 product categories.
(Reporting by Promit Mukherjee; Editing by Dale Smith)
