Canada's trade deficit dropped sharply in May as exports bounced back following a historic collapse due to the coronavirus pandemic, the government said Thursday.

The deficit in May stood at CAN $677 million (US $499 million), down from a whopping $4.3 billion in April -- a figure that was revised upwards, Statistics Canada said.

After falling 29.1 percent in April, exports jumped 6.7 percent in May to $34.6 billion, as eight of the country's 11 export sectors bounced back, notably the auto and oil industries.

Imports were again lower in May, falling 3.9 percent to $35.3 billion, after a massive 25.2 percent decrease in April.

However, year-on-year, both exports and imports are still well down from pre-pandemic levels.

"Even with exports seeing some improvement in May, we're still a long way from clearing out the clots that emerged in the coronavirus recession," Avery Shenfeld, chief economist at CIBC Capital Markets, said in a research note.

Canada's overall trade deficit dropped significantly in May 2020, but the deficit with the United States, its main trading partner, more than doubled
Canada's overall trade deficit dropped significantly in May 2020, but the deficit with the United States, its main trading partner, more than doubled AFP / Sebastien ST-JEAN

In May, meat exports registered the highest increase at 26 percent, thanks to higher demand in the United States. Meat processing plant closures due to outbreaks were more pronounced than in Canada.

Imports of chemical, rubber and plastic products, along with auto parts, fueled the decline.

Canada's trade deficit with the United States, its main commercial partner, more than doubled in May to $2.8 billion.

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