Canada’s Economy Grew 0.1% in April as Services Expand
Output rose 0.1 percent to an annualized C$1.57 trillion ($1.49 trillion), Statistics Canada said today in Ottawa, matching the median forecast in a Bloomberg economist survey with 21 responses.
The gain marks the longest string of monthly expansions since September 2011, signaling a further revival from a slump in the second half of last year that was led by investment and exports. Gains this quarter may be hampered after flooding in Alberta this month disrupted energy output and transportation.
“To see growth is an encouraging outcome,” said David Tulk, chief Canada macro strategist at Toronto-Dominion Bank’s TD Securities unit. “Some of the pronounced fears that Canada would fall off the rails at this point in the recovery can maybe be put to the side.”
Tulk still said growth will slow to a 1.6 percent annualized pace from 2.5 percent in the first three months of the year, while Doug Porter of BMO Capital Markets today cut his second-quarter forecast to 1.5 percent from 1.8 percent, citing the Alberta floods and a Quebec construction strike.
The Canadian dollar weakened 0.4 percent to C$1.0516 at 10.13 a.m. in Toronto. One dollar buys 95.09 U.S. cents.
Service-industry output rose 0.3 percent in April to an annualized C$1.10 trillion, while goods production fell 0.3 percent to C$473 billion, Statistics Canada said.
Finance and insurance advanced 0.6 percent, as did wholesaling to lead gains within the services category. Arts and entertainment rose 3.4 percent with an extended National Hockey League season following the end of a labor dispute, according to the report.
Declines in goods production included a 1.5 percent drop in mining and oil and gas, and a 0.4 percent fall in construction.
The report’s mismatch between goods and services output follows comments this month by new Bank of Canada Governor Stephen Poloz that exports and investment need to lead the expansion as indebted consumers and governments pull back.
From a year earlier, the economy grew 1.4 percent in April.
In a separate report, Statistics Canada said its index of raw-materials prices paid by manufacturers rose 0.2 percent in May from the month before. Economists in a Bloomberg survey had a median prediction of a 0.4 percent increase.
The industrial product price index was unchanged in May, while economists forecast the measure of prices received by manufacturers for their goods would rise 0.1 percent.
To contact the reporter on this story: Greg Quinn in Ottawa at firstname.lastname@example.org