Canada: GDP declines in February on weak manufacturing
April 29, 2011
In February, GDP decreased 0.2% over the previous month in seasonally adjusted terms, falling short of January's 0.5% increase as well as market expectations of a flat reading. On an annual basis, GDP grew 2.8%, down from a 3.3% increase observed in January. The annual average growth rate remained at 3.5% in February, which was unchanged from the previous month. The monthly decline was mainly driven by disappointing results in the manufacturing sector and, to a lesser extent, in wholesale trade. On the other hand, retail trade and finance, insurance and real estate services, which account for more than 20% of GDP, expanded in February. Overall, output decreased in 8 of the 18 categories surveyed by Statistics Canada (Statcan). The Central Bank updated its economic forecasts in its April Monetary Policy Report and now estimates the economy to have grown at a seasonally adjusted annualized rate of 2.9% in the first quarter of this year, which is in line with the Consensus Forecast. For 2011, the Central Bank projects GDP to grow 2.9%, before decelerating to a 2.6% expansion in 2012.