Canadian economy rebounds in February
GDP expanded 0.4 per cent, with gains tied to ramp-up in idled oil and auto production
Canada’s economy rebounded more than economists forecast in February, a reassuring sign the nation is poised to emerge from a recent soft patch in growth.
Gross domestic product expanded 0.4 per cent during the month following a 0.1-per-cent contraction in January, Statistics Canada reported Tuesday. Economists anticipated a 0.3-per-cent gain. The gains were due to idled oil and auto production coming back on line.
The numbers showed broad-based increases in key sectors such as manufacturing and signs that rail bottlenecks may be dissipating, boding well for a pickup in growth for the rest of the year. After a slowdown that began in the second half of last year, most economists are anticipating growth will return to above 2-per-cent pace in coming months and prompt the central bank to continue with rate increases.
“The Canadian economy hit a pothole to begin the year, but February’s GDP reading suggests that it was only a temporary bump in the road,” Royce Mendes, an economist at CIBC Capital Markets, said in a note to investors.
Most economists are forecasting the economy grew by less than 2 per cent for a third straight quarter to start 2018. The Bank of Canada estimates first-quarter growth of 1.3 per cent, before the expansion accelerates to 2.5 per cent in the second quarter and 2.0 per cent for all of 2018.
GDP numbers for the first two months suggest there is potential for an upside surprise in the first quarter, with the economy tracking just under an annualized 2 per cent pace currently.
The Canadian dollar rose on the report, paring earlier losses. Canada’s economy slowed down considerably in the second half of last year, and the slump deepened in January as the country suffered through rail disruptions and shutdowns in the oil and auto sectors. But February showed signs of a clear turnaround.
Extraction from the oilsands was up 3 per cent as production returned to normal following shutdowns in January. But the gains went beyond oil. Fifteen of 20 industrial sectors record- ed higher activity in February and excluding oil, GDP was up 0.3 per cent for the month.
There are also signs the worst of the country’s rail issues may be over.
Rail transportation edged down 0.1 per cent, much better than the 3.4 per cent decline in January.