By Louise Egan
OTTAWA (Reuters) - High prices for energy exports boosted Canada's current account surplus in the second quarter, but the gain fell short of expectations and cements the view that quarterly economic growth will be tepid at best.
The surplus rose to C$6.76 billion ($6.44 billion) from a downwardly revised second-quarter surplus of C$4.46 billion, Statistics Canada said on Thursday.
It was the second quarter in a row that the surplus widened, bringing it to the highest level in a year. The gain was below the market forecast of a surplus of C$8 billion, held back by growing deficits in services and investment income.
"Clearly, export prices matter as much as volumes when it comes to Canada's balance of payments, and commodities in particular, have been keeping Canada on track toward a decade of quarterly current account surpluses," said Krishen Rangasamy of CIBC World Markets in a note to clients.
The sharp gains in prices for petroleum, natural gas and coal helped lift the goods surplus to its highest level since the fourth quarter of 2005, at C$16.44 billion.
Yet the volume of overall goods exports fell 1.3 percent in the quarter, according to one measure used by Statscan's balance of payments division.
Economists said the softening in real exports suggests a weaker contribution from trade to the second-quarter gross domestic product number, to be released on Friday at 8:30 a.m. EDT.
Quarterly growth is seen coming in at 0.7 percent, according to the median forecast in a Reuters poll.
Exports of automotive products sank to their lowest since the final quarter of 1996 while foreign sales of forestry products advanced for the first time since 2005 due to price gains, Statscan said.
The deficit in services edged higher in the period, driven by larger payments to foreign providers of financial and transportation services. However, Canadian travelers spent less money in the United States due to the declining value of the Canadian dollar versus the U.S. dollar, leading to a smaller travel deficit.
The investment income deficit also grew on rising profits from foreign direct investment and a record demand by foreigners for Canadian securities.
(Editing by Scott Anderson)
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