Yahoo Finance Canada GDP surprises, rises 0.3 per cent in January
Canada’s economy economy expanded in 0.3 per cent in January.
Economists expected a growth rate of 0.1 per cent.
Statistics Canada says the manufacturing sector rose 1.5 per cent and construction grew for the first time in eight months.
After barely expanding in the fourth quarter of 2018, economists weren’t expecting much.
“Oil production was the hole in a surprisingly high-calorie doughnut for the Canadian economy in January, as the rest of the economy performed much better than expected,” said Avery Shenfeld, chief economist at CIBC Capital Markets, in a research note.
“Overall, a better than expected start to Q1 after a near zero growth rate in Q4, and reason enough for the Bank of Canada to hang on to its hopes that the growth stall late last year will prove temporary.”
Shenfeld says the GDP report is negative for fixed income but bullish for the loonie.
Despite the data, Capital Economics expects the economy to slow to a point that forces the Bank of Canada to cut interest rates.
“January’s 0.3 per cent rise in monthly GDP was far better than expected, and its broad-based nature will lend support to the view that the economy’s soft patch is mainly due to temporary factors,” said Stephen Brown, senior Canada economist at Capital Economics in a research note.
“But with forward-looking indicators still consistent with below-potential GDP growth in the months ahead, we continue to think that the Bank of Canada will cut interest rates later this year.”
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