The deficit widened to $3.34 billion from $2.99 billion in April and was second only to the record $3.57 billion shortfall in March, Statistics Canada said Tuesday in Ottawa. The volume of exports dropped 2.5 per cent in May, following two straight monthly increases.
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Since the middle of a year ago when the Federal Reserve made clear it was planning to raise interest rates to keep the economy from eventually overheating, the dollar has strengthened, making USA exports less competitive.
Imports rose in May because we brought in more consumer goods, precious metals, and basic and industrial chemical, plastic and rubber products.
But the drop in exports in May highlights a change in America’s recovery from recession in which the economy has relied more on domestic drivers like construction and services, rather than export-led industries such as manufacturing. Altogether, imports in seven of 11 sectors increased. Sales fell 4.2 percent to France, 2.1 percent to Mexico and 3.0 percent to Japan. Market expectations were for a May trade deficit of C$ 2.50 billion, according to economists at Royal Bank of Canada.
Exports to countries other than the United States fell 1.6 per cent to $10.0 billion in May as shipments to the United Kingdom dropped $345 million and exports to China decreased by $307 million.
As for the US, the Commerce Department reported that the US trade deficit grew slightly in May, reflecting declines in sales of American-made aircraft and machinery.
WASHINGTON-The US trade gap expanded modestly in May, perhaps finding its level after a port disruption on the West Coast caused a turbulent spring.
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The USA trade deficit widened 2.9 per cent in May to $41.9 billion, up from an April imbalance of $40.7 billion.
