Sunday, November 23rd5.5°C
24124
24058

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

23872


Recent Trending




Today's Market
S&P TSX15111.13+35.95
S&P CDNX789.135.56
DJIA17810.0691.06
Nasdaq4712.97+11.102
S&P 5002063.50+10.75
CDN Dollar0.8905+0.0009
Gold1197.70+10.60
Oil76.51+0.87
Lumber331.00+4.50
Natural Gas4.266-0.253

 
Okanagan Companies
Pacific Safety0.155-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.30+0.03
Cantex0.04+0.005
Anavex Life Sciences0.178+0.008
Metalex Ventures0.03+0.005
Russel Metals31.62+0.82
Copper Mountain Mining2.24+0.06
Colorado Resources0.125-0.015
ReliaBrand Inc0.013-0.002
Sunrise Resources Ltd0.050.00
Mission Ready Services0.35+0.015

 
23744


22899

FEATURED Property
1880751979 Metcalfe Avenue
5 bedrooms 5 baths
$979,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


What I learned in China: Part 2

As per my previous article on my visit to China, we have much to learn about and from their people. It is potentially the largest market on earth with 1.3 billion people in one country but much will d...


Retirement: Health Issues

Our health is really our greatest asset and maintaining our health is of tremendous importance. You want to do what you can to ensure that health issues will not jeopardize the enjoyment of your retir...


Be quiet already!

No, you’re not crazy. There really are voices in your head. Voices that keep you from doing what you need to do during your customer care calls. It can be the voice of your teachers, your parent...

_



24119

24119


Member of BC Press Council


24203