Canada’s gross domestic product was unchanged in February, compared with economists’ forecast for a contraction, as a plunge in oil rigging and drilling was offset by gains in consumer spending.
Output remained at an annualized C$1.65 trillion ($1.37 trillion), Statistics Canada said Thursday in Ottawa, while the median forecast in a Bloomberg economist survey was for a 0.1 percent contraction. The output of real estate brokers rose 3.3 percent to end five months of declines, retailing rose 1.5 percent, and support activities for mining and oil and gas extraction dropped 15.4 percent.
Canada’s central bank says the economy stalled in the first quarter in a “front loaded” oil shock that will fade in the second half of the year. Governor Stephen Poloz told lawmakers two days ago his “insurance” rate cut in January along with stronger foreign demand should return the economy to full output next year.
“It’s better than expected but not setting the world on fire,” and suggests annualized first-quarter growth of less than 0.5 percent, Brian DePratto, an economist at Toronto-Dominion Bank, said by telephone. “That commodity shock hasn’t fed through to other sectors to the extent you expect.”
Today’s GDP report showed signs of an uneven recovery across industries. Declines of 0.8 percent in manufacturing and wholesaling were met with a 2.3 percent increase at utilities that ramped up power production amid cold weather.
Statistics Canada today also revised the January reading to a decline of 0.2 percent from the initial reading of 0.1 percent, and raised the December expansion to 0.4 percent from 0.3 percent.
“The Bank of Canada has already acknowledged a likely weak first quarter,” Paul Ferley, assistant chief economist at Royal Bank of Canada in Toronto, wrote in a research note. “Policy is expected to remain on hold as the central bank awaits evidence of economic growth returning to an above-potential rate on a sustained basis.”
Canada’s dollar weakened 0.4 percent to C$1.2067 per U.S. dollar at 9:54 a.m. Toronto time, following three days of gains.
The better-than-expected Canadian output report contrasted with Wednesday’s U.S. report that first-quarter growth slowed to a 0.2 percent annualized rate, less than the median economist forecast of 1 percent.