Brutal winter ices recovery
OTTAWA—The brutal winter iced Canada’s recovery to the worst growth rate in more than a year as businesses held off on investments and many other key sectors shrank or recorded weak gains.
Statistics Canada said today that the country’s gross domestic product advanced by 1.2 percent—about a half-a-point below economists’ expectations—for the first quarter of the year.
“Frankly, it only looked good in comparison to what happened in the U.S.,” said Bank of Montreal chief economist Doug Porter.
“It was a pretty weak quarter all around; there’s not many positives,” he added.
Porter said the bottom-line number was flattered by the deep dive in imports, which meant trade made a positive contribution despite the fact that exports fell.
The hope going forward—and the expectation of many economists—is that the better weather in the spring months will help heat up Canada’s economic activity, including getting shoppers back into the malls and business finally investing in expansion and productivity improvements.
But David Madani of Capital Economics noted the March growth rate—the last month of the first quarter—only came in at 0.1 percent over February’s, so even that hope may be optimistic.
There were few things to cheer in the Statistics Canada report and markets reacted by dropping the Canadian dollar 0.18 of a cent to 92.1 cents (U.S.) after its release.
For the Bank of Canada, which had expected a growth rate of 1.5 percent for the first quarter, the news likely was not bad enough to change its rather dovish stance on the economy.
Madani, however, said governor Stephen Poloz should not be so quick to take rate cuts completely off the table.
Most analysts believe next week’s policy-setting will see the bank remain on the sidelines and signal no directional change from a position it has held for months—that interest rates aren’t moving north any time soon.