Good trade number masks economic weakness, economist says

Canada's merchandise trade surplus rose in August from July, but the change is not as positive as it first appears, a bank economist says.

That's because the August surplus of $5.8 billion — up from $4.2 billion in July — was the result of falling imports, not rising exports.

Exports in the month were down 1.6 per cent, but imports plummeted 5.8 per cent, Statistics Canada reported. The fall in imports was "the largest percentage drop since December 1991," the agency said.

"The steep drop in imports is a sign of waning domestic demand, which is yet another sign of a weakening economy," CIBC economist Krishen Rangasamyst said on the bank's website.

Exports to the United States fell 3.9 per cent to $32.5 billion, led by energy drops, while imports from the U.S. decreased 5.8 per cent to $23.9 billion. This gave Canada a surplus of $8.6 billion, up $200 million from July.

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