By Ismail Shakil and Steve Scherer
OTTAWA (Reuters) -Canada's trade surplus with the world increased twice as much as forecast in September, as higher crude prices helped exports gain for a third straight month, data showed on Tuesday.
September's trade surplus gained to C$2.04 billion ($1.48 billion), Statistics Canada said, compared with a Reuters poll pointing toward a C$1.00 billion surplus. August's surplus was upwardly revised to C$949 million from C$718 million previously.
"A lot of the gains driven by energy pricing," said Stuart Bergman, chief economist at Export Development Canada.
Exports rose 2.7% in September and were up 0.4% on a volume basis. Energy products led the gains, mainly due to higher crude oil prices that coincided with the extension of voluntary production cuts by OPEC+.
Wheat exports also contribute with a more-than 50% rise, as favorable weather conditions allowed for a more rapid harvest in 2023.
Most of the wheat gain is thanks to "the quicker harvest as a result of the good weather we had," Bergman said. "That's going to take off some of the gains we might have seen in future months."
The Canadian dollar was trading 0.5% lower at 1.3760 per U.S. dollar, or 72.67 U.S. cents, as oil prices fell and the greenback rallied against a basket of major currencies.
Partly offsetting the gains, exports of metal and non- metallic mineral products fell 10.7% in September from an all-time high in August.
Total imports increased 1.0%, driven by passenger cars and light trucks. Overall, motor vehicles and parts recorded its sixth consecutive monthly rise, despite strike disruptions in the United States - Canada's biggest trade partner.
By volume, total imports were up 1.7%, indicating a decline in prices.
The Canadian economy has stalled and it might have slipped into shallow recession in the third quarter as the Bank of Canada's 10 interest rate hikes since last year take effect. The bank expects economic growth to remain muted until the end of 2024, before growth picks up again 2025.
"Stripping out price effects, trade looks to have added to growth in the third quarter, leaving us on track for a small positive," said Shelly Kaushik, an economist at BMO (TSX:BMO) Capital Markets, in a note.
"However, the details of the report are in line with broader activity slowing to a standstill following aggressive monetary tightening."