CANADA TRADE RISE SEEN AS START OF RECOVERY
Canada's trade picture has brightened
considerably, underscoring economists' predictions the sector
would post a long awaited recovery this year.
    The federal government reported today that the monthly
surplus soared to 1.25 billion Canadian dlrs in February,
double January's 623 mln dlrs surplus and sharply higher than
February 1986's 189 mln dlr tally.
    "Hopefully it's the beginning of a trend," said Richardson
Greenshields of Canada Ltd economist Susan Clark in Toronto.
    Economists generally don't expect such large gains over the
next months, but are looking for an upward trend throughout the
year.
    "We thought the trade balance would improve ... over the
year, and it certainly looks as if this morning's figure is
indicative of that," commented economist James Donegan at the
Toronto securities firm of Midland Doherty Ltd.
    Statistics Canada reported the surplus was driven by a 23
pct gain in automobile product exports to a record 3.2 billion
dls in the month.
    "Recovery in the automotive sector helped push the value of
exports up by 5.9 pct in February," the agency said in its
monthly report.
    Total exports expanded to 10.44 billion dlrs from 9.85
billion dlrs in February, while imports slipped to 9.19 billion
dlrs from 9.23 billion dlrs.
    Economists have predicted the 1987 trade surplus would end
up three to five billion dlrs higher than last year's dismal
10.1 billion dlr total. In 1985 the surplus was 17.48 billion
dlrs.
    Money market analysts said the positive trade news touched
off a modest rally in the Canadian dollar, which rose to 76.85
U.S. cts on North American markets early this morning after
closing at 76.58 cts Wednesday.
    The currency was hovering around 76.78 cts in early
afternoon trading.
    Economists have been banking on an improved trade
performance this year to stimulate an otherwise sluggish
Canadian economy.
    Money market analysts said the positive trade news touched
off a modest rally in the Canadian dollar, which rose to 76.85
U.S. cts on North American markets early this morning after
closing at 76.58 cts Wednesday.
    The currency was hovering around 76.78 cts in early
afternoon trading.
    Economists have been banking on an improved trade
performance this year to stimulate an otherwise sluggish
Canadian economy.
    They say the country's consumers, who have been spending at
a torrid pace in recent years, will sharply curtail outlays
this year and this should help curtail the flow of imports into
the country.
    Meanwhile, demand for Canadian exports in the United
States, by far the country's largest market, is expected to be
strong as a result of a projected rise in American consumer
spending and the relatively low value of the Canadian currency.
    "We maintain what's going to drive Canada's export
performance is income growth in the U.S.," said Midland's
Donegan.
    But at the Bank of Nova Scotia, deputy chief economist
Warren Jestin was less optimistic about the U.S. outlook and
said it could be a mistake to read too much into February's
trade upturn.
    Jestin said, "Given the fact the U.S. economy is showing
signs of weakening--particularly car sales--it would indicate
that part of the strength (in Canada's trade figures) is
probably transitory."
 Reuter
