Canadian real gross domestic product (GDP) was stable in February after a 0.2% dip in January, which was revised from the 0.1% drop initially reported by Statistics Canada.
This latest report beat analysts’ consensus expectation of a 0.1% dip, and the better-than-anticipated numbers come in spite of difficulties in the oil and gas sector.
“Flat is the new up,” said BMO chief economist Douglas Porter. “The winter months were no treat for Canada’s economy, but it now looks like GDP managed to hold roughly steady through a rough patch for oil and gas and the auto sectors – arguably the two most important industries in the country.”
Mining, quarrying and oil and gas extraction fell 0.6% in February, driven mostly by a 15.4% decline in drilling, which had dropped 10.8% in January. This contributed to an overall decline of 0.2% for all good-producing industries in February.
Manufacturing fell 0.8% after dropping 0.7% in January, which Porter said was “largely due to a deep decline in auto assemblies early in the year amid retooling – which is not normal this time of year.”
Brian DePratto, economist at TD Economics, called February’s GDP growth “feeble” but not “atrocious.”
“Should the commodity price shock prove to be concentrated in the first quarter, as the Bank [of Canada] expects, today’s report would hardly be cause for alarm,” he said.
“We continue to view the current monetary policy rate as sufficiently accommodative, and as such expect that the Bank of Canada will maintain the rate at 0.75% through the remainder of the year and into 2016, before beginning a tightening cycle late next year.”
The downward revision to January’s figures was more than offset by an upward change to December’s figures.
“Real GDP growth was revised down to a 0.2% decline [from the 0.1% dip initially reported] in January 2015 and revised up to a 0.4% increase [0.3% initially reported] in December 2014,” Statistics Canada said in its report.
“Revisions to January and December result from the incorporation of updated information on Canadian industries.”
The Canadian dollar took a hit at the time of the announcement despite the somewhat positive news on the GDP front. The movement was partly in reaction to some lacklustre payroll numbers released at the same time as well as some good news coming from south of the border in terms of American personal spending and jobless claims. As of press time, our dollar had fallen more than half a cent to 82.50 cents U.S.
