Canadian economy growing slightly, but well off U.S. level

Income rose largely because of higher export prices of crude oil and crude bitumen in the first quarter of the year: StatsCan

Statistics Canada reported on Friday that real gross domestic product (GDP) grew 0.1 per cent in the first quarter of this year, the same growth rate as the fourth quarter of 2018.

The federal agency said real gross national income rose 0.9 per cent, largely because of higher export prices of crude oil and crude bitumen. Higher consumer spending raised final domestic demand, which rebounded 0.8 per cent after a 0.2 per cent decline in the previous quarter.

Expressed at an annualized rate, real GDP increased 0.4 per cent in the first quarter. In comparison, real GDP in the United States grew 3.2 per cent, added StatsCan.

“Growth in real GDP was driven by a 0.9 per cent increase in household spending and an 8.7 per cent rise in business investment in machinery and equipment. These increases were moderated by a 1.0 per cent decline in exports, coupled with a 1.9 per cent increase in imports. Additionally, investment in housing continued to decline, down 1.6 per cent in the first quarter,” explained the federal agency.

“Businesses accumulated $16.1 billion of non-farm inventories in the first quarter, pushing the economy-wide stock-to-sales ratio up from 0.838 in the fourth quarter of 2018 to 0.846. Accumulation of cannabis stocks largely contributed to the $1.7 billion increase in farm inventories.”

StatsCan said housing investment fell 1.6 per cent in the first quarter, the fifth consecutive quarterly contraction. Declines in new home construction (-3.6 per cent) and ownership transfer costs (-3.2 per cent) were slightly offset by increased renovation activity (+1.8 per cent).

It said export volumes declined one per cent in the first quarter, the first decrease since the third quarter of 2017.

“A 0.9 per cent rise in services exports moderated a 1.5 per cent drop in goods exports. There were substantial volume declines in exports of farm and fishing products (-9.5 per cent), and crude oil and crude bitumen (-2.8 per cent). Exports of commercial services rose 1.3 per cent, after a 1.6 per cent increase in the fourth quarter of 2018.”

– Mario Toneguzzi

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