An increase in merchandise exports to the United States and European Union countries offset declines in exports to Asia, for an overall rise of 0.8% to $35.1 billion in September.

Analysts were calling for a $4.1 billion surplus. Exports to the U.S. and E.U. increased, offsetting a decline in exports to Asia. Imports from the U.S. and the E.U. fell, driving total imports down by 1.3%.

The trade surplus with the U.S. jumped to $8.5 billion while Canada ran a trade deficit of $3.6 billion with the rest of the world, notes RBC Financial Group. “In contrast to the United States, the trade account remains one of several positive influences on the Canadian dollar.”

TD Bank says that this morning’s data were messy enough to make it difficult to separate the wheat from the chaff. The increase in shipments was due to higher prices, not rising export volumes. And, agricultural exports dropped. “On balance, any impact of the struggling U.S. economy on Canada’s export performance still appears limited. Meanwhile, while the import side of the ledger may appear weak on the surface, September’s decline comes on the heels of a particularly strong gain in August, and the upward trend is, there too, fully intact,” says TD.

“With the U.S. economy weakening noticeably in the autumn months, the soft spots on Canada’s export front are likely to multiply in the months ahead. While auto exports are likely to continue to level off, the recent declines in U.S. industrial output will also weigh on shipments of industrial goods and machinery and equipment in the near term,” TD notes.

BMO Nesbitt Burns says that the report represents, “yet another healthy reading on Canadian growth, providing some much-needed support for the battered loonie”.

CIBC World Markets agrees with TD, saying, “With higher prices accounting for the entire export gain, this report is not as bullish for Q3 real GDP growth as one might initially guess. Where this report will leave its mark is on the Q3 current account. An expanding merchandise balance should trigger a roughly $2 billion annualized increase in Canada’s current account surplus, moving it back above the $20 billion threshold.”

“Although much stronger than last week’s consensus, much of the ‘surprise’ in today’s report was removed by yesterday’s burst in manufacturing shipments. The week’s remaining data (retail and wholesale trade) will be key to narrowing down the Q3 growth call, which currently looks headed for roughly 3.5% — a result largely in line with the US, where third quarter growth is likely to be boosted from its initial 3.1% reading,” concludes CIBC.