Canada's current account surplus dips

Canada's current account surplus fell in the third quarter to C$9.4 billion ($8 billion), from a revised C$11.2 billion in the second quarter, Statistics Canada said on Monday, but beat analysts' expectations. Analysts had forecast, on average, a surplus of C$8.73 billion during the July-September period. Statscan hiked the second quarter surplus to C$11.2 billion from a preliminary reading of C$10.42 billion.
The Canadian dollar edged up to C$1.1834 against the US dollar, or 84.50 US cents, from C$1.1842, or 84.45 US cents after the data was released.
"While the surplus was down from Q2 levels, it topped expectations, it is well up from the C$26.5 billion annualised reading of a year ago, and it is the third largest quarterly surplus in the past 50 years," BMO Nesbitt Burns' chief economist Sherry Cooper said.
"For the Bank of Canada, there's not a lot here to affect their decision next week, as the surplus was close to expectations."
The Bank of Canada hiked interest rates in each of the past two months to 2.50 percent and a number of economists expect it to do so again next week in spite of Canada's soaring dollar, which cabinet ministers and executives fear may hurt exports.
"The positive effect of the stronger terms of trade is more than offsetting the negative effect of declining real net exports of goods and services," J.P. Morgan economist Ted Carmichael said, adding that the current account surplus is equal to 2.9 percent of gross domestic product.
Canada's third-quarter goods surplus slumped to C$17.3 billion from C$19.1 billion in the second quarter. Import growth overtook export growth and higher prices were behind the rise in the value of energy exports, Statscan said.
The auto sector accounted for half of the C$1.8 billion goods surplus fall from the second quarter, marking the biggest fall for that one industry since the second quarter of last year, a Statscan analyst said.
The capital and financial account showed that Canadian foreign assets rose by more than its international liabilities with direct investment abroad leading the way.