Canadian economic growth continues to accelerate in April, likely to grow strongly in Q2

The Canadian economic growth continued to accelerate in April. Canada’s economy expanded 0.2 percent on a sequential basis, owing to the growth in service-producing industries. The breadth of growth continued to be quite strong as 14 out of 20 major industries reported growth.

The goods-producing side of the economy saw a mixed performance. Mining, quarrying and oil & gas recorded rise of 1.2 percent, aided by solid growth in drilling and rigging services that more than countered weakness in the oil and gas extraction subsector, stemming from issues at the Mildred Lake oil facility.

Growth was flat to a bit up elsewhere, except amongst manufacturers, where output dropped 0.9 percent in April almost reversing the 1 percent climb in March, stated TD Economics in a research report. The drop in subsectors was quite broad based as non-durable and durable manufacturing output shrank in April.

On the service-producing side of the economy it was another strong month as output was up 0.3 percent. Other notable gainers were for accommodation and food services, retail trade, transportation, wholesale trade and professional services.

Canada’s economy has started the second quarter on a decent footing, recording its sixth consecutive monthly growth. The economy continues to witness growth throughout a broad swath of industries and which looks set to meet the expectations of 2.9 percent growth for the second quarter, noted TD Economics.

Given that Canada is expected to see another quarter of strong economic growth, it has put the worst of the 2014/2015 oil price shock behind it. Consequently, the focus is now on the Bank of Canada’s monetary policy, with the overnight target currently at an emergency level of 0.5 percent.

“We remain of the view that the first Bank of Canada interest rate increase in more than seven years will take place this fall, likely in October”, added TD Economics.

At 16:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was bearish at -91.396, while the FxWirePro's Hourly Strength Index of Canadian Dollar was bullish at 94.5535. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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