Canada's trade deficit with the rest of the world narrowed to $55 million in June from $1.1 billion the previous month, Statistics Canada reported Wednesday.

Merchandise exports increased 2.3 per cent to just under $29.3 billion following three monthly declines, while imports fell 1.3 per cent to just over 29.3 billion.

The increase was due to exports of energy products, which rose 14 per cent to $6.4 billion. Exports of crude oil rose 22.3 per cent, reflecting increased demand from the United States.

If energy products were excluded, total exports would have declined 0.5 per cent, Statistics Canada said.

Exports to the U.S. climbed 5.1 per cent, widening Canada's surplus with its largest trading partner to $3.1 billion from $1.7 billion in May.

Higher exports of gold were behind the growth in the industrial goods and materials sector, which increased by 6.1 per cent to $6.3 billion.

Machinery and equipment exports decreased 4.1 per cent to $6.4 billion, the lowest level since January 1998.

Exports of automotive products fell 5.6 per cent to $2.9 billion, led by a 35.3 per cent decline in truck exports and a 9.7 per cent drop in the shipment of motor vehicle parts.

Imports of machinery and equipment fell six per cent to $8.5 billion, while the industrial goods and materials sector declined 4.3 per cent to $5.8 billion.

Imports of other consumer goods were down 1.6 per cent to $4.7 billion, mainly due to declines in footwear, apparel and home furnishings.