Canada recorded a $1.43-billion trade deficit with the rest of the world in July as imports rose faster than exports, Statistics Canada said Thursday.

But analysts were quick to say the report is good news for the Canadian economy.

'This is no bad news story.'—BMO Nesbitt Burns economist Doug Porter

The agency said imports rose 8.3 per cent from the previous month to $31.7 billion — mainly because of a 9.9 per cent gain in imports from the U.S. Exports climbed 3.3 per cent to $30.3 billion.

July's $1.43 billion trade deficit compares to a revised surplus of $37 million in June.

The agency said the gain in imports halted four straight months of decline and was the result of an 8.7 per cent rise in volumes as prices slipped 0.4 per cent.

Shipments of machinery and equipment, automotive products and energy products were the main drivers of import growth.

The growth in exports was attributable to a 5.9 per cent increase in volumes. Prices fell 2.4 per cent.

Economists said the trade figures were better than the deficit headline would suggest.

"Two-way trade picked up significantly in July, attesting to the fact that demand is picking up on both sides of the 49th parallel," said CIBC World Market's Krishen Rangasamy in a commentary.

BMO Nesbitt Burns economist Douglas Porter agreed.

"This is no bad news story," he said. "The broad-based gain in export and import volumes is another sign the Canadian recovery is indeed taking hold."

U.S. trade deficit widens

The U.S. trade deficit widened to $32 billion US in July, the U.S. government reported Thursday.

That was the highest level in six months and much larger than the $27.4 billion that had been forecast by economists.

Imports grew a record 4.7 per cent as U.S. demand for foreign cars bounced back and demand for consumer goods and oil also increased.

Exports grew by a smaller 2.2 per cent.