Canada’s economy slowed in Feb, likely contracted in March

Canada’s economy slowed in Feb, likely contracted in March

28 Apr    Finance News, PMN Business, REU

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OTTAWA — The Canadian economy grew 0.1% in February from January, less than expected, and gross domestic product likely contracted in March, Statistics Canada data showed on Friday.

Analysts had forecast a 0.2% rise from an upwardly revised 0.6% growth in January. March GDP was most likely down 0.1%, Statscan said in a preliminary estimate.

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The flash estimate for March, which may change when a final tally is released next month, means the economy likely grew 2.5% on an annualized basis in the first quarter. The Bank of Canada has forecast a 2.3% rise in real GDP in the quarter ended March.

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The central bank, which raised interest rates at a record pace over the past year to cool the economy and bring prices down, expects positive but weak growth during the remaining three quarters of this year.

The bank left its key policy rate at a 15-year high of 4.50% for a second time in a row in April, but struck a hawkish tone, playing down market expectations for a cut this year as the risk of a recession diminished.

Canada’s goods-producing sector expanded 0.1% in February, while the service-producing sector also posted a 0.1% rise.

February’s gains were helped by growth in the public, construction, finance and insurance sectors, while wholesale and retail trade sectors were drags.

In March, GDP was likely impacted by decreases in retail and wholesale trade sectors, Statscan said.

The Canadian dollar was trading 0.4% lower at 1.3650 to the greenback, or 73.26 U.S. cents, nearly its weakest in one month, as the U.S. dollar notched broad-based gains. (Reporting by Ismail Shakil in Ottawa; additional reporting by Dale Smith in Ottawa and Fergal Smith in Toronto; editing by Steve Scherer, Mark Porter and Jonathan Oatis)

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