Canada: Economic activity growth slides to 10-month low in February
GDP expanded 0.2% in month-on-month seasonally adjusted terms in February, which followed January’s 0.5% increase and was half the preliminary estimate for February. On an annual basis, GDP grew 0.8% in February, matching January’s expansion.
The services sector drove growth in February, as goods production stagnated. January’s cold snap drove swings in several subsectors: Oil and gas extraction and rail transportation rebounded in February as activity normalized following the disruption from the cold weather in January, while the utilities subsector shrank sharply in February as heating demand faded.
A flash estimate suggested that GDP was unchanged in March, as increases in utilities and real estate were offset by decreases in manufacturing and retail trade. If confirmed, this would put the GDP expansion at around 2.5% in quarter-on-quarter annualized terms in Q1 as a whole, which would be a notable improvement from Q4’s 1.0%.
On the February data, Desjardins’ Randall Bartlett said:
“Even though nearly half of real GDP subsectors declined in February, some of that weakness was temporary, reflecting warmer weather following a cold snap in Western Canada in January. Indeed, that explains the industry leading decline in the utilities sector (-2.6%) that helped to offset the solid rebound in mining and oil and gas extraction (2.5%).”
TD Economics’ Marc Ercolao commented on the outlook:
“[The] GDP report reinforces expectations that first quarter growth will post a decent print compared to the meager growth seen over 2023, the deceleration in February and March signal this rebound is unlikely to last.”