OTTAWA - The Canadian economy remained in low gear in April as the key resource and construction sectors were stuck in the spring mud.
Statistics Canada said Monday the economy grew by 0.1 per cent in April, the same pace as in March.
Economists had expected a gain of 0.2 per cent, according to Thomson Reuters.
CIBC economist Nick Exarhos noted that the drop in the resource sector should be temporary, but added the weakness in construction was a bit of a surprise.
"Even if some of April's weakness should prove temporary, and thus likely to influence the next monthâ€™s readings positively, the disappointment means that growth is likely to come in closer to two per cent than 2.5 per cent (the Bank of Canadaâ€™s prior forecast) in the second quarter," Exarhos wrote in a note to clients.
"An undershoot in growth is likely to give governor Stephen Poloz enough reason to stay on his current policy stance, even with inflation readings heating up."
Statistics Canada said the output of service industries increased 0.3 per cent in April, led by wholesale and retail trade. However, the output of goods-producing industries fell 0.3 per cent as all the major sub-sectors except manufacturing fell.
Oil and gas extraction dropped 0.8 per cent due to lower oil and natural gas production, while mining and quarrying fell 1.3 per cent. Support work for mining and oil and gas extraction increased 1.9 per cent.
Construction dropped 0.6 per cent for the month as residential building and repair work fell.
Wholesale trade rose 1.3 per cent in April, led by increases in machinery, equipment and supplies as well as building materials and supplies.
Retail trade grew 0.8 per cent in April, following a 0.1 per cent decline in March.
A bitterly cold winter had been blamed for a slow start to the year and it appeared Monday as if the sluggishness seen in the first three months carried over to April.
Economists have been hoping that strength in the U.S. economy would help things pick up in the second quarter. Last week, revised data suggested the U.S. economy shrank at an annual rate of 2.9 per cent in the first quarter of the year, a move not seen since the financial crisis.
"The Canadian economy is trudging along at a pace of right around two per cent, simply not strong enough to cut into the unemployment rate or to get any pulses racing," BMO Capital Markets chief economist Douglas Porter said.
"What's required now is for the U.S. economy to find a higher gear, because the domestic sources of growth in Canada are looking pretty tired," Porter said.