Canada economy slows, growing 1.3 percent in Q1

Canada's economy slowed in the first three months of the year, growing at an annualized rate of 1.3 percent, according to official data released Thursday. Statistics Canada pointed to a deceleration in household spending, lower exports of non-energy products as well as a decline in housing investment for the pullback in economic activity.
After posting growth of 1.7 percent in the previous quarter, and other indicators suggesting the economy was chugging along, analysts had forecast gross domestic product (GDP) would rise to 1.9 percent at the start of 2017.
But, the government statistical agency said GDP was dragged down by a drop in housing investment, marking the largest decline since the 2009 financial crisis, and lower resale activity due in part to the roll-out in January of new stricter mortgage rules. Consumer spending also decelerated for a third consecutive quarter. Goods purchases including passenger cars were flat, while spending on services rose only 0.5 percent in the quarter.
Sales of medium and heavy trucks, buses and other motor vehicles and industrial machinery and equipment were up in the quarter. Mineral exploration and evaluation rebounded and software sales accelerated. Exports of goods also edged up 0.2 percent, with growth in crude oil and bitumen and motor vehicles and parts partially offset by a sharp decline in refined petroleum energy products.
Imports, meanwhile, rose by 1.2 percent, led by passenger cars and light trucks, tires, motor vehicle engines and parts and basic chemicals and industrial chemical products. Imports of services - including for commercial, transportation and travel - also increased. "The Canadian economy looked decidedly more sluggish than where expectations had it pegged for Q1," commented Royce Mendes, an analyst at CIBC Economics.
"While the quarter was a miss, the final month of the period showed signs of strength," he added, noting that March GDP rose slightly, "signaling a healthy handoff for Q2." He cautioned, however, that the March uptick was largely based on a rise in the volatile oil and gas sector.