Canada current account swings to surplus in Q1 for first time since 2008

·2-min read

By Steve Scherer

OTTAWA (Reuters) - Canada's current account balance in the first quarter swung to a surplus for the first time since 2008, boosted this year mainly by exports of oil and lumber, data showed on Monday.

Canada posted a C$1.18 billion ($977.47 million) surplus in the first quarter compared with a revised C$5.27 billion deficit in the fourth quarter of 2020, Statistics Canada said.

The largest contributors were energy products (up C$6.8 billion) and forestry products and building and packaging materials (up C$1.4 billion), mostly on higher prices, Statscan said.

Economists said the swing to a current account surplus, reflecting greater demand for the commodities and other goods that Canada produces, has been supportive of the Canadian dollar.

The currency has climbed more than 5% since the start of the year, the strongest performance among Group of 10 currencies. On Monday, the Canadian dollar was trading 0.2% lower at 1.2087 to the greenback, or 82.73 U.S. cents.

"The overall current account surplus likely helped support the Canadian dollar during the first quarter," Royce Mendes, a senior economist at CIBC Capital Markets, said in an emailed note.

"But, as Canadians begin traveling outside the country again, it could sink back into deficit territory before the year is over," he added.

In a separate report, Statscan said producer prices in Canada rose by 1.6% in April from March, mainly on higher prices for lumber and other wood products.

Softwood lumber prices gained 169.4% from a year earlier, the largest annual increase in the history of the index.

"Persistent demand for softwood lumber in the United States and Canada for construction and residential renovations, combined with lower supply, drove this category upward," Statscan said.

Producer prices gained 14.3% on the year in April, the biggest rise since 1980, led by a 78.4% increase in prices for energy and petroleum products.

(Reporting by Steve Scherer, additional reporting by Fergal Smith in Toronto; Editing by David Gregorio)

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