Statistics Canada said energy imports had fallen by 18.4% during the month, most of it in volume terms and concentrated in aviation fuel. Energy exports, mostly to the United States, fell by only 1.4%.
The trade report gave a short-lived boost to the Canadian dollar. The currency rallied as high as C$1.1540, or 86.66 US cents, from C$1.1658 to the US dollar, or 85.78 US cents, at Monday's close. But it was unable to crack through a six-month high hit on Monday and later retreated.
The overall surplus rose because imports fell by more -- 4.4% -- than the 1.8% decline in exports. Canada exported C$32.50 billion and imported C$31.40 billion. The figures are adjusted for seasonal factors.
The median forecast of analysts surveyed by Reuters was for a surplus of C$500 million. But economists were quick to warn against viewing the stronger-than-expected surplus, following two months of trade deficits, as a sign of economic recovery.
"Be careful with green shoots in the Canadian trade data as the months ahead will impose renewed hits on manufacturing shipments and exports as the auto sector goes back into shut down mode," said Derek Holt, economist with Scotia Capital.
Canada's economy is expected to contract sharply in the first quarter and the details of the trade report do little to change that view, economists said.
Exports will likely remain weak for months to come and softer consumer spending will dampen imports too.
Import data showed businesses paring back their demand for machinery and equipment -- a sign tight credit markets were still hampering investment plans.
"That does not bode well for the investment component of the GDP numbers," said Charmaine Buskas, senior economics strategist at TD Securities.
"The takeaway from this report is that despite the better than expected headline number, all is not on the mend in Canadian trade," she said. (Reuters)
