Canadian GDP growth hits 3.1% in first quarter, slower than expected

OTTAWA –

The economic system grew at an annualized price of three.1 per cent within the first quarter, helped by enterprise funding and family spending, Statistics Canada said Tuesday.

The outcome was down from an annualized price of 6.6 per cent within the fourth quarter of 2021.

Statistics Canada said the change got here as export volumes dropped 2.4 per cent for the quarter, following two consecutive quarterly will increase.

Paul Ashworth, chief North American economist at Capital Economics, said the expansion for the primary three months of the yr was properly beneath the consensus estimate, however broadly in keeping with the Financial institution of Canada’s April financial coverage report.

“The surprising weak point in first-quarter GDP development was principally because of a downward revision to the January knowledge, which now reveals a 0.2 per cent month over month decline, because the Omicron-related restrictions had an even bigger influence than beforehand thought,” Ashworth wrote in a report.

Nonetheless, he said the true economic system stays on a powerful footing, which implies the Financial institution of Canada can press forward with elevating its key rate of interest by half a share level on Wednesday.

Statistics Canada said family spending rose 0.8 per cent within the first quarter, to mark a 3rd consecutive quarterly improve.

Spending on sturdy items gained 2.6 per cent within the first quarter, helped by a 16.1 per cent improve in spending on new passenger automobiles and a 3.5 per cent acquire for brand new vans, vans and sport utility automobiles.

Nonetheless, Statistics Canada famous that regardless of the will increase, spending on cars remained decrease than pre-pandemic ranges, as provide chain points continued to harm the auto sector.

Residential building gained 4.3 per cent as spending on renovations rose 9.3 per cent, resale prices gained 4.6 per cent and new building rose 0.2 per cent.

Enterprise funding in non-residential constructions rose 2.9 per cent and in equipment and tools gained 0.9 per cent within the quarter, whereas spending on engineering constructions rose 3.5 per cent.

Statistics Canada additionally said compensation of workers rose 3.8 per cent on a nominal foundation for the quarter. Excluding the third quarter of 2020, it said it was the biggest quarterly improve because the second quarter of 1981.

The company said vital wage development was seen throughout the economic system, together with in skilled and private companies, commerce, manufacturing, well being care and social help and building industries.

The general development for the primary quarter got here because the economic system grew 0.7 per cent in March.

Statistics Canada said its preliminary studying for April signifies the economic system grew 0.2 per cent for the month, however cautioned the determine can be revised when it releases its official determine on June 30.

The studying on the economic system comes forward of the Financial institution of Canada rate of interest announcement on Wednesday.

The central financial institution is anticipated by economists to lift its key rate of interest goal by half a share level to 1.5 per cent in an effort to gradual inflation.

In its April financial coverage report, the Financial institution of Canada had forecast an annualized development price of three.0 per cent for the primary quarter.

This report by The Canadian Press was first printed Might 31, 2022.