The Bank of Canada’s dour outlook for growth over 2008 may prove to be overtly pessimistic. Fortifying the rebound in the government’s recently released, month-over-month GDP numbers, Statistics Canada reported a greater than expected rise in the economy’s physical trade account. The May surplus rose to C$5.5 billion against expectations of a C$5.3 billion positive gap and a negatively revised C$4.8 billion difference to the previous month’s reading. From the breakdown of the report, it was clear that the account is being held back by weak demand from the US - which consumes nearly 80 percent of Canada’s exports. With consumer spending and business activity in America slowing to new lows, the balance between the two countries slipped to C$8.056 billion. However, aside from the US figures, Canadian trade is doing well. Exports to other nations have hit record highs - with shipments rising 5.4 percent overall. Topping demand for Canadian produced goods was energy. With prices pushing record highs and demand little effected, energy exports rose 8.1 percent. Other staples saw significant monthly increases like the 5.4 percent rise in machine shipments and 9.0 percent jump in industrial exports. The only sector to suffer was the auto industry which recorded a 3.5 percent decline in export activity. Overall, it seems that the BoC’s forecasts for trade to subtract nearly 2.5 percentage points off growth to leave expansion at its slowest pace since 1992 are so far unfounded. - John Kicklighter, Currency Analyst for DailyFX.com