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By Greg Quinn
OTTAWA (MNI) - Canada's economic growth lagged expectations in
the first quarter as weak foreign trade countered gains in
consumer spending and business investment.
Gross domestic product grew at a 0.4% annualized pace, while
analysts in a MNI survey had expected a 0.7% increase.
Statistics Canada also lowered the fourth-quarter 2018 growth estimate
to 0.3% from 0.4%.
The report confirms the ``detour'' Bank of Canada officials said
the economy took late last year, and the two quarters combined are the
slowest growth since an oil crash in early 2015. Policy
makers held their key rate at 1.75% Wednesday and said there's evidence
the economy will gather speed later this year. Statistics Canada's
report Friday showed the first quarter ended on a positive note with a
March gain of 0.5%, the fastest since last May and ahead of forecasts of
The first quarter figures showed a divide between healthy
domestic demand that boosted consumer spending by 3.5%, the fastest
in almost two years. Business investment rebounded with a 3.6% rise,
following three previous consecutive declines. Canadian spending on
imports also rose 7.7%, a drag on growth.
Exports were the other main source of weakness in the first
quarter, with a 4.1% drop that was the fastest since the third
quarter of 2017. Crude oil and farm products led the decline, in
part because of transportation bottlenecks.
Another area the Bank of Canada is watching is business
inventories, because they could be sign of products that are hard to
sell. Inventories climbed C$17.7 billion in the first quarter, the most
since the third quarter of 2017.
The March GDP gain included 16 of 20 industries tracked by
Statistics Canada, including a 2.0% rise in oil and gas
extraction that followed six previous consecutive declines.
Energy production increased as the province of Alberta scaled
back production cuts it mandated after prices tumbled.
--MNI Ottawa Bureau; email: email@example.com