GDP up only 0.1 per cent in April. Resource sector and construction weigh on growth. -

GDP up only 0.1 per cent in April. Resource sector and construction weigh on growth.


To recap:

  • Canada’s gross domestic product inched up a modest 0.1 per cent in April after adjusting for inflation, Statistics Canada said today. It was the fourth consecutive month of positive growth but a slowdown from the 0.3 per cent monthly gain recorded on average between January and March.
  • Growth was mostly in the service sector, which saw aggregate output expand by 0.3 per cent, led by the finance industry and wholesale trade. An abnormally large 3.4 per cent gain in the arts and recreation industry reflected the extended NHL season after a four-month lock-out that ended in January, Statistics Canada noted.
  • Goods producing industries contracted by 0.3 per cent, largely as a result of a 1.5 per cent drop in the natural resource sector.
  • Oil and gas extraction activity fell 2.7 per cent in April, after growing at a healthy clip in March (1.7 per cent) and February (1.1 per cent). Output at potash and coal mines declined by 0.6 per cent.
  • Another source of drag was the construction industry, which recorded a 0.4 per cent dip as building activity in both the residential and commercial real estate market slowed.

What the analysts are saying:

  • “All said, we anticipate Canadian economic growth to fall below trend,” writes TD’s Francis Fong, who predicts second-quarter GDP growth to come in at 1.6 per cent. That would be considerably below the 2.5 per cent pace of the first three months of the year and slightly more pessimistic than the Bank of Canada’s 1.8 per cent growth forecast for the April-to-June period. Fong, though, predicts that, as the impact of the U.S. automatic spending cuts wanes, a pickup in growth south of the border later this year should translate into a healthier 2-2.5 per cent annualized growth for Canada.
  • RBC’s Paul Ferley has a more positive take on second-quarter growth, which he pins at 2.1 per cent.
  • The drop in oil and gas sector activity, says CIBC’s Emanuella Enenajor, potentially reflects production challenges after maintenance at Fort-McMurray, Alta.
  • TD’s Fong writes that the resource sector slump was “likely impacted by the heavy commodity price correction seen in April.”

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GDP up only 0.1 per cent in April. Resource sector and construction weigh on growth.

  1. China’s growth rate is projected at 7.7% this year.

    Perhaps someone could tell Dear Leader we need a deal with the EU and China NOW.

    ‘A global race is under way and it is waiting for absolutely no one.’

  2. I don’t remember details but Chinese have allowed enormous credit to build up since 2008 and a couple of weeks ago a major Chinese bank defaulted on payment of overnight interbank loan. Chinese authorities have decided to reign in spending, all forecasts made before about a month ago are now moot. The Fed in America has also signaled its going to change its stimulus policies and now forecasts need to be updated.
    Daily Telegraph June 16 2013:

    China’s shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.

    “There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling,” she told The Daily Telegraph.

    Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis. “They have replicated the entire US commercial banking system in five years,” she said.

    • The ‘Tory Telegraph’ is confusing wishful thinking with reality….as they have tried to do for years.

      • Bloomberg – June 28:

        Borrowing costs for Chinese banks have surged the most in at least six years this month as rating companies say a cash crunch threatens to swell bad loans.

        The yield spread for one-year AAA bank bonds over similar-maturity sovereign notes jumped 56 basis points so far this month to 163 basis points, the most in ChinaBond records going back to 2007. The similar AA gap widened 59 basis points to 188. Even as China Construction Bank Corp. (939) President Zhang Jianguo said yesterday cash conditions have normalized, the benchmark seven-day repurchase rate was fixed at 6.85 percent, almost twice the 3.84 percent average for this year.

        • I’ve been reading the reports on China crashing for years now. It’s wishful thinking, not reality.

          Cash flow problems come and go. Check their foreign reserve. It’s $3.3T

          • “Overall credit has jumped from $9 trillion to $23 trillion since the Lehman crisis.”

            “Check their foreign reserve. It’s $3.3T”

            We shall see which trumps what!

            I don’t think bank system is going to collapse or anything like that but the Chinese have likely changed their economic policies and growth predictions need to be changed.

            They don’t call it this but Chinese are believers in Austrian economics – at some point the Chinese are going to crash world economy to fix domestic one. As I understand it, the Chinese need to stop saving $$$ and thinking of their old age and start shopping, being a bit more hedonistic and the world economy would regain equilibrium.

          • Their foreign reserve ALONE is $3.3T you ninny. The Chinese are fine.

            And no, they don’t believe in Austrian economics. Be serious.

            Economic equilibrium doesn’t exist.

          • All the while, I’ve been labouring under the delusion that the Chinese were neo-Marxists.

          • Nope, state capitalists, and beating our sox off

          • Would Canadians mind been ruled that way?

          • Probably wouldn’t notice or care. LOL