Friday, October 24th5.7°C
23840
22501

Canadian economy picks up

Canada's economic output picked up speed to a a 0.4 per cent pace in May, setting the stage for a second quarter expansion that is expected to help reverse the year's slow start.

Economists had anticipated May would show signs the economy was putting the weak start to 2014 behind it, especially since the U.S. reported Wednesday that its output had grown by four per cent annualized during the April to June period.

But the May uptick was a little faster than even analysts had anticipated, suggesting a second quarter number of 2.5 per cent that will be bigger and in line with what had previously been considered an overly optimistic forecast by the Bank of Canada.

Analysts said the result takes the sting out of the first quarter slowdown to 1.2 per cent annualized growth and the unexpectedly weak 0.1 per cent monthly gain of April that had economists downgrading expectations for the second quarter as well.

"Looking further ahead, yesterday's stronger-than-expected preliminary U.S. real GDP reading, combined with an improving U.S. labour market, confirms our expectation of an acceleration in economic activity stateside," TD Bank economist Jonathan Bendiner said in a note to clients.

"This augurs well for Canada's export sector, which will increasingly be relied upon to fuel economic growth as domestic sources of growth are likely to wane."

There is already evidence the strong U.S. bounce is lifting Canadian economic activity.

The big winner in May was goods production, which rose 0.5 per cent and especially the auto sector that is dependent on exporting to the U.S. market. The auto assembly industry advanced by 13.5 per cent.

Overall, the troubled manufacturing sector, which is also export dependent, had a good month with a gain of 0.8 per cent from April.

While the results were encouraging for the Canadian economy ahead, analysts said they were unlikely to influence the Bank of Canada's position on interest rates since they are in line with its expectations.

More critical to the bank's decision on when to start raising rates will be what occurs in the U.S. and whether the Federal Reserve moves up their plans to tighten interest rates. Most analysts believe that, given the dropping unemployment rate and accelerating economy, the Fed may move as early as mid-2105, which could also force Canadian bank governor Stephen Poloz's hand.

May's result constituted the fifth consecutive month that GDP has risen in Canada.

Aside from manufacturing, the mining, oil and gas sector also showed strength, advancing by 0.7 per cent with crude oil production leading the way. Mining activity excluding oil and gas fell 1.5 per cent, however, due to maintenance activities.

Construction picked up in May by 0.5 per cent following two consecutive declines.

Meanwhile, the service sector increased by 0.4 per cent.

In a separate report, Statistics Canada said weekly earnings in Canada had risen by 2.6 per cent in May over the past year, slightly ahead of the current inflation rate. As well, the agency said non-farm payroll employment had increased by 158,500, or one per cent, over last May, a higher level of job creation than tracked by the more often quoted labour market survey.

The Canadian Press

COMMENTS WELCOME

Comments on this story are pre-moderated and approval times may vary. Before they appear, comments are reviewed by moderators to ensure they meet our submission guidelines. Keep it clean, keep it civil, keep it truthful, stay on topic and be responsible. Comments are open and welcome for three days after the story is published. We reserve the right to close comments before then. Comments that appear on the site are not the opinion of Castanet, but only of the comment writer.



Read more Business News

23901


Recent Trending




Today's Market
S&P TSX14536.49+49.66
S&P CDNX804.69-3.91
DJIA16766.2288.32
Nasdaq4471.803+19.011
S&P 5001959.61+8.79
CDN Dollar0.8905+0.0001
Gold1231.20+2.10
Oil80.73-1.02
Lumber335.00+5.40
Natural Gas3.609-0.013

 
Okanagan Companies
Pacific Safety0.105-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.15-0.02
Cantex0.07+0.015
Anavex Life Sciences0.194-0.004
Metalex Ventures0.045+0.005
Russel Metals33.41+0.25
Copper Mountain Mining2.05-0.03
Colorado Resources0.135-0.005
ReliaBrand Inc0.012-0.001
Sunrise Resources Ltd0.05-0.01
Mission Ready Services0.42+0.01

 



23833

FEATURED Property
18003041113 Parkbluff Lane, Kelowna, BC
6 bedrooms 8 baths
$3,295,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...


We can get on together

I was in LA this week. I witnessed such crazy and unusual circumstances as I strolled along Hollywood Blvd and Sunset Blvd. A far cry from sleepy Peachland in the Okanagan! The strange thing was, I f...


Weakening global growth worries

The Big Picture Growth worries persist Worries about weakening global growth and its potential impact on the US economic recovery roiled markets around the globe this week. Europe continues to be the ...

_








Member of BC Press Council


22771