Canada’s economy expanded for a sixth consecutive month in February, led by manufacturing and spending related to the Vancouver Winter Olympics.
Gross domestic product increased 0.3 percent from January, Statistics Canada said today in Ottawa. The result matched the median of 21 estimates by economists surveyed by Bloomberg News.
The economy grew at a 5.8 percent annualized first-quarter pace, the Bank of Canada forecast last week when it dropped a “conditional commitment” to keep its key lending rate at a record low 0.25 percent until July. Governor Mark Carney said yesterday that future moves to tighten monetary policy aren’t “pre-ordained” and depend on future growth and inflation.
“People who have the money are spending it,” said Alan Preston, who has owned the Hearts and Flowers shop for 30 years in Charlottetown, Prince Edward Island. Preston said he started taking more large orders around the start of the year, a sign that last year’s recession was over.
The Canadian dollar traded for C$1.0093 per U.S. dollar at 9:55 a.m. Toronto time, from yesterday’s C$1.0052. The currency has gained 0.6 percent this month as investors increased bets that the Bank of Canada will raise interest rates.
The economy should record first-quarter growth of at least 5 percent, said Paul Ferley, assistant chief economist at Royal Bank of Canada in Toronto. “The strength being sustained is clearly indicating that there is less of a need for the stimulus already in place,” Ferley said.
Retailers, Factories Gain
Retailing increased 0.6 percent in February, and the arts, entertainment and recreation category rose 6.1 percent, boosted by the Olympics, Statistics Canada said.
Manufacturing rose 1.2 percent in February, accounting for about half of the economy’s growth, on gains in output of metals, pharmaceuticals and beverages.
Canadian factories were among the hardest hit by last year’s recession, and Carney said yesterday that persistent strength in the country’s dollar is a risk to the recovery. The Canadian dollar was worth more than its U.S. counterpart on April 6 for the first time since July 2008.
“The dollar around parity in some ways is a good thing,” Canadian National Railway Co. Chief Executive Officer Claude Mongeau told reporters in Montreal April 27. “The dollar forces people to adjust.”
Canadian exporters are getting help from a U.S. economy that is also showing a recovery. The Commerce Department reported today that the U.S. economy expanded at a 3.2 percent annual rate in the first quarter as households spent more freely.
In a separate report, Statistics Canada said that factory prices fell 0.4 percent in March, the first decline in five months. Excluding the effect of the Canadian dollar’s rise against its U.S. counterpart, the index would have increased 0.4 percent.
Factory raw-material costs increased 0.8 percent, led by crude oil, Statistics Canada said. Economists predicted the industrial product price index would fall 0.1 percent, and the raw-materials index would increase 1 percent, according to surveys gathered by Bloomberg.
Statistics Canada revised the February reading for industrial prices to a 0.1 percent increase, from an initial estimate the index was unchanged.