A drop in imports coupled with growth in exports to the U.S. helped drive Canada's trade surplus with the world to $428 million in October. (Eugene Hoshiko/Associated Press)

A spike in sales to the United States helped drive Canadian merchandise exports up 3.4 per cent in October, Statistics Canada said Thursday.

Imports decreased 0.8 per cent for the month, pushing Canada's trade surplus with the world to $428 million. That compared with a deficit of $850 million in September.

Exports increased by $1 billion to $31.1 billion on the back of a 2.6 per cent rise in volumes and a 0.8 per cent increase in prices, the federal statistical agency said. It was the second consecutive monthly increase in the value of exports and the fourth advance in five months.

Imports declined to $30.7 billion, as prices decreased 1.2 per cent while volumes inched up 0.3 per cent. It was the third consecutive monthly decrease.

Industrial goods and materials led the growth, representing more than half of the increase in exports. Energy products, agricultural and fishing products, and automotive products also contributed to the gain. Lower exports of machinery and equipment slowed the increase.

Gold powers gain

"Gold was a big story, as precious metals exports jumped 34 per cent to a record $1.3 billion and alone accounted for roughly a quarter of the improvement," BMO economist Doug Porter said.

To the United States alone, exports grew 3.6 per cent while imports fell 3.1 per cent. As a result, Canada's trade surplus with the United States expanded to $3.4 billion in October from $2.0 billion in September. The October increase in exports to the United States was the third advance in five months.

Canada's trade deficit with countries other than the United States was $3.0 billion in October, compared with $2.9 billion in September, as exports grew 2.9 per cent and imports rose 3.2 per cent.

"The persistently strong loonie that has been making headlines for some time seems almost to be an afterthought in the latest trade data," TD Bank economist Francis Fong said. "The unexpected strength of the past two reports certainly points to further improvement in the broader Canadian economy in October."