Canadian real GDP growth expands sequentially in February, economy to have growth 1.7 pct in Q1

Canada’s real GDP growth expanded sequentially in the month of February, owing to the resolution of earlier setbacks in many industries. The economy grew 0.4 percent in the month. While the solid outturn was driven by a few outsized gains, there was nevertheless strong breadth to the growth as 15 of 20 major industries recorded increased output, noted TD Economics in a research report.

Goods producing industries performed well in February, driven by mining, quarrying and oil and gas extraction, which rose 2.4 percent after dropping 2.9 percent in January. Production started to move back to normal in February after some issues in the previous month. Manufacturing also performed strongly as transportation equipment manufacturing picked back up after the unusual plant shutdowns in January. Rounding out the border sector were strong gains construction and agriculture. Utilities output dropped 0.9 percent in February, thanks to warmer than normal weather in Central and Eastern Canada.

The service side of the economy recorded a small gain, although revisions to January signify that the 21 month growth streak came to an end last December. On the negative side of the ledger was real estate, which recorded a drop for a second straight month, in line with the weak resale activity seen in February. However, most of the sub-industries saw growth, with marked gains in professional services, arts and entertainment, and transportation.

“As it stands, February's performance points to an expansion of about 1.7 percent annualized in the first quarter. This is roughly in line with Canada's underlying potential and a modest improvement over our initial expectation for the quarter”, stated TD Economics.

Some modest pick-up of growth is expected through the middle of the year; however, with economic slack effectively absorbed, the first quarter’s growth rate represents the rate that Canadians can expect in months ahead.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was bullish at 86.0757, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 38.345. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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