The gap between what Canada buys from the rest of the world and what it sells to it narrowed to $1.9 billion in January, down from $3.1 billion the previous month.

Statistics Canada reported Wednesday that both exports and imports fell during the month. But exports fell by less than imports did, which is why the trade deficit got smaller.

After spiking to an all-time high in December, imports fell by 4.3 per cent to $47.7 billion. While there were fewer imports in just about every sector compared to December, on an annual basis imports have still risen by two per cent overall.

While the Canadian economy imported less in January, it also exported less. Exports fell by 2.1 per cent to $45.8 billion. Most sectors saw declines, but energy products saw a 2.9 per cent jump. January was the sixth consecutive monthly increase for that sector, and they're now up by almost 30 per cent from the level seen last summer.

On an annual basis, however, exports have declined by 1.5 per cent in the past 12 months. If energy is stripped out, they're actually down by more than twice that.

"The trade data are another indication that Canadian growth has settled into a much more subdued pace," Bank of Montreal economist Robert Kavcic said of the numbers.

But a trade surplus in goods with the U.S.

Trade between Canada and the United States has become a bugaboo for the current U.S. administration, with President Donald Trump railing about Canada's trade surplus with the United States.

In January, Canada exported $34.1 billion worth of goods to the United States, a decline of 2.9 per cent. But imports fell too, by 1.8 per cent to $30.9 billion. As a result, Canada did indeed have a trade surplus in goods with the U.S. of about $3.1 billion in January.

But those figures only include trade in goods. If services are included, the United States actually has a small annual trade surplus with Canada, according to official U.S. government data, although official U.S. numbers for January have yet to be released.