The gross domestic product (GDP) of Canada rose 0.40 per cent in February, Statistics Canada said on Tuesday, a sign that Q1 growth could outperform the Bank of Canada’s relatively weak expectations.
The economy grew 0.1 per cent higher than Reuters poll’s estimates as the analysts had forecast February GDP would increase by 0.3 per cent.
Even if March’s GDP figures are flat, Statistics Canada analysis shows that annualised Q1 growth would be 1.6 per cent, greater than the 1.3 per cent in the Bank of Canada’s latest forecast on April 18.
The central bank, which has raised interest rates three times since last July as the economy strengthens, says future hikes will depend heavily on economic data, reports Reuters.
Paul Ferley, assistant chief economist at Royal Bank of Canada, noted that when the bank kept rates unchanged on April 18, it seemed in no rush to tighten monetary policy.
“I don’t think the news today is strong enough to prompt an immediate response at the upcoming meeting (on May 30),” he said by phone.
The Canadian dollar firmed on the news and by 9:20 am EDT (1320 GMT) was trading 0.1 per cent higher at C$1.2836 to the greenback, or 77.91 US cents.
The output of goods-producing industries expanded by 1.2 per cent as the mining and oil and gas extraction sector recovered from unscheduled maintenance shutdowns at some oil sands facilities.
Services-producing industries edged up 0.1 per cent as increases in most sectors offset declines in wholesale trade and real estate.
“Overall, encouraging, but not enough to force the understandably cautious Bank of Canada back into action,” said Paul Ashworth, chief North American economist at Capital Economics.