Canadian economy likely grew over 3 pct in Q1 2017, says Scotiabank

Canada’s economy is likely to have expanded strongly by over 3 percent in the first quarter of 2017, though momentum was front-end loaded to the turn of the year, stated Scotiabank in a research report. Consumer and housing sectors continue to drive output gains. Auto and home sales tracked record levels through March. Meanwhile, consumer spending and sentiment are being underpinned by increased government transfers, low interest rates and strengthening job growth.

Since August 2016, monthly job gains averaged 34,000, the most solid eight-month tally in more than a decade. But subdued wage gains and increase household debt are likely to ease consumption growth in 2017, while affordability pressures and new regulations might cool housing activity. Service sector activity continues to stay brisk with marked gains in financial, professional and hospitality sectors.

Meanwhile, exports have continued to dismay in spite of a weaker Canadian dollar and signs of rebounding global activity. Non-energy export volumes in the initial two months of 2017 were 5 percent lower than year-ago levels. Core inflation continues to be on a downward trajectory, with the average of the Bank of Canada’s new preferred measures decelerating to just 1.5 percent year-on-year in March.