Canada’s economy maintained a sluggish-but-positive growth pace in April, Statistics Canada reported Monday, as the anticipated rebound from the country’s weather-impaired first quarter remained elusive.
Statistics Canada reported that Canadian gross domestic product (GDP) rose a thin 0.1 per cent in April from March – matching March’s tepid growth pace, and coming slightly short of economists’ consensus expectation of 0.2 per cent. Compared with a year earlier, April’s GDP was up 2.1 per cent – again, matching the March number, but short of economists’ estimate of 2.3 per cent.
There had been hope in many quarters that Canada’s economy would show some acceleration in April, after an unusually long and harsh winter had been blamed for slowing the economic pace both in Canada and in the United States, Canada’s biggest trading partner and thus a key driver of Canadian economic activity. The U.S. economy actually contracted at a 2.9-per-cent annualized pace in the first quarter, according to revised figures released last week by the Commerce Department, while Canada’s first-quarter GDP was up just 1.2 per cent annualized.
“The modest increase in overall April GDP is disappointing, as it implies only limited strengthening from weather-related weakness in the first quarter. Even assuming further modest gains in May and June, the data is consistent with [second-quarter] annualized growth rising to only 2.0 per cent,” said Paul Ferley, assistant chief economist at Royal Bank of Canada, in a note to clients. “If realized, this would represent the second quarter in a row of growth below the Bank of Canada’s forecast, which assumed increases of 2.5 per cent and 1.5 per cent in Q2 and Q1, respectively.”
Services-producing industries did pick up pace from their sluggish first quarter, posting month-over-month growth of 0.3 per cent in April, led by a 1.3-per-cent jump in wholesale trade. But goods-producing industries slumped 0.3 per cent, their weakest month since December, mainly due to a sharp 0.8-per-cent slowdown in the oil and gas production sector. Manufacturing output expanded by 0.2 per cent in the month, its fourth consecutive advance, but construction posted its second consecutive 0.6-per-cent contraction.
“The Canadian economy is trudging along at a pace of right around 2 per cent, simply not strong enough to cut into the unemployment rate or to get any pulses racing,” said Douglas Porter, chief economist at Bank of Montreal, in a research note. “What’s required now is for the U.S. economy to find a higher gear, because the domestic sources of growth in Canada are looking pretty tired. Until then, Canada looks stuck in a 2-per-cent world for growth, and a 1-per-cent world for [Bank of Canada] overnight [interest] rates.”
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