OTTAWA – Canada’s economy appeared to have weathered the harsh winter relatively unscathed.
Statistics Canada says the economy grew by a solid 0.2 per cent in February, following an even stronger 0.5 per cent expansion in January.
Barring future revisions or a disappointing March numbers, the data suggests that the economy bounced back relatively strongly from December’s deep freeze in economic activity that many attributed to crippling ice storms in Canada and the U.S.
The February advance hit consensus expectations and sets the economy on track to better the Bank of Canada’s prediction for a 1.5 per cent growth rate in the first quarter.
The agency said the February performance might have been better but for the two-week NHL break in action for the Sochi Olympics, which was likely responsible for a five per cent drop in the arts and entertainment component.
The outlook was additionally helped by an upward revision on December’s gross domestic product retreat from 0.5 per cent to 0.4 per cent, making for a better handoff to the new year.
“A sturdy report,” said Jimmy Jean, an analyst with Desjardins Capital Markets, especially when contrasted to the U.S.’s initial estimate of how the harsh winter froze activity south of the border. Growth was limited to 0.1 per cent annualized during the quarter, the U.S. reported Wednesday.
But while that may give Canada bragging rights about which North American country has the strongest economy, Jean noted that U.S. weakness does not bode well for the Canadian export sector, which the Bank of Canada is counting on for sustained growth.
Scotiabank economist Derek Holt also cautioned that March may turn “ugly” for Canada because of the month-long port strike in Vancouver.
February’s growth was mostly on the goods producing side, which grew by 0.5 per cent, with gains in mining and oil and gas extraction, and most encouragingly, manufacturing. The services sector edged up by 0.1 per cent.