A surge in exports of energy, aircraft and pharmaceutical products helped propel Canada’s economy higher in the second quarter of this year, Statistics Canada said Thursday.
The economy rocketed to an annualized pace of 2.9 per cent in the period from April 1 through June 30, compared with a slightly revised annual pace of 1.4 per cent in the first three months of 2018, the agency said.
Economists had expected an annualized pace of 3.0 per cent for the second quarter, according to Thomson Reuters Eikon.
CIBC senior economist Royce Mendes said the economy sped ahead in the second quarter, but noted there was little momentum headed into the third.
“The acceleration in growth is unlikely to be sustained in the second half of the year,” he said.
Mr. Mendes said he expects the Bank of Canada to keep its key interest-rate target on hold when it makes its next rate announcement next week, but would likely look to raise it at the following meeting in October.
The Bank of Canada last raised its benchmark interest rate in July, to set its target for the overnight rate at 1.5 per cent.
“If a NAFTA [North American free-trade agreement] deal comes to fruition, or at least negotiations are progressing in a positive manner, it still looks like the economy will warrant another rate hike come October,” Mr. Mendes said.
The increase in growth was mainly the result of higher exports, which saw an increase of 2.9 per cent in the quarter.
That was the highest growth rate for that category in four years, led by energy exports, which accelerated at a rate of 5.6 per cent.
Exports of goods were 6.3 per cent higher in the second quarter, driven particularly by pharmaceuticals, while exports of aircraft, aircraft parts and engines grew by 13.4 per cent.
Service exports edged 0.2 per cent lower.
Imports, meanwhile, were higher by 1.6 per cent, faster than the 1.0-per-cent growth rate recorded in the first quarter. Statistics Canada said much of that growth was a result of higher refined-energy imports to offset an expected shutdown of four Canadian refineries in April and May.
Household spending was also higher, up 0.6 per cent in the second quarter, compared with the 0.3-per-cent growth seen in the first three months of the year.
The increase was mainly a result of higher bills for utilities including water, electricity and gas, and because households were spending more for services such as renovations, up 0.8 per cent.
Housing investment rebounded in the second quarter, up 0.3 per cent compared with a revised 2.7-per-cent drop in the previous three-month period. But spending on home ownership transfer costs and new construction was lower.
Business capital investment was higher by 0.4 per cent, but that was the slowest pace of growth seen in the segment since the fourth quarter of 2016, and largely the result of a slowdown in purchases of machinery and equipment.