OTTAWA -- Canada's merchandise trade deficit narrowed to $978 million in September compared with a revised deficit of $1.2 billion in August, as imports fell faster than exports, Statistics Canada said Tuesday.

Economists on average had expected a deficit of $700 million, according to financial markets data firm Refinitiv.

TD Bank economist Omar Abdelrahman called it a disappointing trade report with broad-based weakness across the major export categories and a similar story for imports.

"Unfortunately, demand for Canadian exports remains clouded by trade uncertainty and the recent contraction in U.S. manufacturing activity," Abdelrahman wrote in a brief report.

"Indeed, the Bank of Canada's latest monetary policy report last week included further contractions in exports the second half of 2019, with the dovishness in its statement centerd around trade conflicts and uncertainty."

The trade deficit came as total imports fell 1.7 per cent to $50.8 billion in September.

Imports of metal and non-metallic mineral products fell 9.2 per cent in September due to a drop in gold imports.

Meanwhile, total exports fell 1.3 per cent to $49.8 billion.

Exports of metal and non-metallic mineral products fell 7.3 per cent, while exports of energy products dropped 2.6 per cent due to lower crude oil exports.

Royal Bank senior economist Nathan Janzen said the September trade figures leaves recent lacklustre trends largely in place.

"The slightly narrower trade deficit was driven only by imports falling more than exports. That is hardly a positive for domestic demand," Janzen said.

"Equipment imports in particular have been soft -- not a good sign for near-term business investment -- although those actually edged slightly higher in volume terms in September."

Regionally, Canada's trade surplus with the United States decreased slightly to $4.8 billion in September compared with $4.9 billion in August.

Exports to the United States fell 0.6 per cent in September, while imports moved down 0.4 per cent.

Canada's trade deficit with countries other than the United States narrowed to $5.7 billion in September compared with $6.1 billion in August.

This report by The Canadian Press was first published Nov. 5, 2019