Canada?s economy perky in April

OTTAWA ? Canada?s economy grew a surprisingly perky 0.3 per cent in April, the first time so far this year it has expanded above an annualized rate of two per cent.

Economists had expected a modest 0.2 uptick in April, following a weak start to the year that resulted in 1.9 per cent annualized growth in the first quarter ? well short of the 2.5 per cent growth rate predicted by the Bank of Canada.

Analysts noted that April?s performance, while above the consensus estimate of private sector economists, was partly due to temporary factors and not a resumption of strong economic growth.

April?s healthy showing was partly due to an expected rebound in the mining and oil and gas sector, coming off maintenance and production difficulties in February and March, noted Sonya Gulati, a senior economist with TD Bank.

Mining and oil and gas extraction bounced back 2.7 per cent in April after declines of 2.0 per cent in February and 1.1 per cent in March.

?However, given the temporary factors at play, this magnitude of out-sized growth in this particular sector will not likely be repeated in the months to come,? Gulati said.

Other sectors were less impressive and some down-right discouraging.

Retail trade, manufacturing, construction, accommodation and food services and the public sector declined.

Jimmy Jean of Desjardins Capital Markets said the 0.8 per cent decline in retail trade was the largest in over a year and the third monthly contraction for that part of the economy so far this year.

Since consumer spending has been an area of strength through much of the recession and recovery, the decline in retail trade adds to signals that Canadians shoppers may be more cautious in future.

?Overall the report is less spectacular than the headline,? Jean said, although he added it may cause him to revise his prediction of a tiny 1.5 per cent pace for the full second quarter, which ends June 30.

Other analysts said the quarter is on track to come in slightly above two per cent.

In another bit of encouraging news, the Conference Board of Canada reported its help-wanted index gained 1.1 percentage points in May, a good indicator for future hiring.

In general, however, Canada?s economy has underperformed expectations in the first half of this year, due mostly to external factors, including the ongoing debt crisis in Europe and slower than expected momentum in the United States and emerging economies, particularly China.

Several forecasting houses have recently downgraded expectations for the economy to about two per cent for the year, and some believe 2013 will be even weaker.

? Copyright (c) The Montreal Gazette

Source: http://feeds.canada.com/~r/canwest/F6939/~3/oajHTGX9aBg/story.html

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