Canada: GDP rebounds in February as unplanned energy-sector shutdowns end
May 1, 2018
Canada’s economy rebounded in February following a one-off contraction at the outset of the year as facilities in the oil and gas sector got back online following unscheduled maintenance shutdowns. According to Statistics Canada, GDP grew 0.4% in monthly terms in February, a nine-month high and contrasting January’s 0.1% contraction. February’s reading came in slightly above analysts’ expectations.
February’s print recorded expansions in 15 of the 20 included industrial sectors. Goods-producing industries posted stronger output from a month earlier as non-conventional oil extraction—primarily in Alberta’s oil sands—rebounded following unplanned maintenance. Moreover, non-energy mining activity, as well as manufacturing and construction activity, also posted gains in the month. In the services-producing industries, output ticked up marginally from a month earlier as gains across most sectors offset weaker performances in the wholesale trade and real estate sectors. January and February’s back-to-back slowdowns in real estate activity were the first sequential losses in nearly eight years and brought on by the implementation of new mortgage-lending rules on 1 January.
On an annual basis, GDP growth climbed to 3.0% from 2.7% a month earlier. Meanwhile, annual average GDP growth edged higher to 3.5% from 3.4%, marking the strongest reading in nearly seven years.
Pleasantly surprised by February’s outturn, Brian DePratto, Senior Economist at TD Economics, noted:
“While a rebound in growth was likely given the one-off disruptions that held back January, in the event, the Canadian economy saw a healthy pop back in growth in February. Even better, the outturn came on the back of fairly widespread growth, suggesting healthy underlying momentum. As it stands, February's performance points to an expansion of about 1.7% [SAAR] in the first quarter. This is roughly in line with Canada's underlying potential and a modest improvement over our initial expectation for the quarter.”
Author: Christopher Thomas, Economist