Canada's current account surplus beats expectations

Canada's current account surplus with the rest of the world increased sharply to $5.56 billion on a seasonally adjusted basis in the first quarter of 2008, partly on the strength of higher prices for oil and gas exports, Statistics Canada reported Thursday.

The current account — a broad measure of trade and money flows — covers goods, services, interest payments and other items but excludes capital transactions such as stock purchases and corporate takeovers.

Economist Michael Gregory of BMO Capital Markets said the surplus was bigger than expected, beating a consensus estimate of $2.9 billion.

Although Canada routinely runs current-account surpluses, an initial report in February showed the account in deficit for the fourth quarter of 2007, Gregory noted in a commentary.

That report "caused some market concern," he said, but there is good news: the fourth-quarter number has been revised upward to a $778 million surplus, replacing the $513 million deficit original reported.

In the latest report, Statistics Canada said exports of goods reached $116.7 billion in the first quarter, up five per cent from the fourth quarter.

Oil prices rose more than 20 per cent in the quarter, and prices were higher for other exports, too, including precious metals and agricultural products, amid record sales of wheat and canola, the federal agency said.

Not all the news was good: Exports of automotive products declined for the fourth consecutive quarter, reaching their lowest levels since the end of 1996.

Canada's deficits on commercial services and investment income were largely unchanged while its travel deficit with the rest of the world shrank.

After setting a record fourth quarter, spending by Canadian travellers going to the United States eased in the first quarter, StatsCan said. Even so, the latest travel deficit with the United States is the second largest on record at $2.2 billion, it said.

News of the bigger-than-expected surplus helped to boost the Canadian dollar by 0.08 of a cent to 101.10 cents US.

Canadian First Quarter Trade Account Strongest In A Year And A Half

Canada’s trade surplus grew again in March

Corporate takeovers pull foreign funds into Canada