Shipping containers are seen behind fencing in the Port of Montreal in Montreal, Quebec, Canada, May 17, 2021.
Shipping containers are seen behind fencing in the Port of Montreal in Montreal, Quebec, Canada, May 17, 2021. Reuters / Christinne Muschi

Canada's exports surged in May, mainly on lofty energy prices, helping drive its surplus with the rest of world to a surprise 14-year high, official data showed on Thursday.

Exports rose 4.1%, led by energy but also buoyed by aircraft and potash, Statistics Canada said, while imports fell 0.7%, mostly on lower volumes of consumer goods.

All told, Canada's trade surplus widened to C$5.3 billion ($4.1 billion) in May, well above analyst forecasts of C$2.4 billion and up from an upwardly revised C$2.2 billion in April.

"This seems to be mostly an energy story, specifically, thanks to higher prices," said Stuart Bergman, chief economist at Export Development Canada.

Indeed, Canadian energy exports jumped 5.7% in May to C$20.4 billion, accounting for nearly a third of the value of Canada's total exports. This as global crude prices rose on Russia's ongoing invasion of Ukraine and booming consumer demand.

The overall value of Canadian exports is up more than 20% so far this year, though volumes are down 2.3%, Statistics Canada said.

"The export engine is very clearly carrying the Canadian economy here," said Bergman. "But again, the concern is that we're relying on commodity prices."

Those strong commodity prices are allowing Canada to weather an economic storm threatening to tip many of its fellow G7 rich nations into recession, but the picture could change later this year as prices pull back.

"There is scope for the surplus to improve again in June, but with commodity prices falling across the board, the trade surplus will probably narrow again over the second half of this year," Stephen Brown, senior Canada economist at Capital Economics, said in a note.

Canada's imports fell for the first time in four months in May as retailers brought in less clothing, footwear and accessories, and pharmaceutical products.

"That could be more of a supply issue than a demand one, which is potentially bad news from an inflation standpoint," Andrew Grantham, senior economist at CIBC Capital Markets, said in a note.

The Canadian dollar was trading 0.3% higher at 1.30 to the greenback, or 76.92 U.S. cents.

($1 = 1.2996 Canadian dollars)