The Conference Board of Canada’s Principal Economist Alicia Macdonald offers the following insights on today's Gross Domestic Product data:
“After roaring out of the gate at the start of the year, growth in the Canadian economy slipped in February. With economic growth remaining subdued, so too will price pressures and this will keep the Bank of Canada on the sidelines into next year.”
- Real GDP fell by 0.1 per cent in February, offsetting some of the 0.3 per cent gain recorded in January.
- Declining activity in the mining sector subtracted the most from growth in February. With the mandated production cuts in Alberta’s energy sector, a contraction in mining was not unexpected but this morning’s data showed that the drop was primarily driven by non-oil and gas mining as subdued international demand led to declines in metal and potash mining.
- Reductions in mining activity also led to a drop in demand for transportation and warehousing, which was exacerbated by a train derailment which temporarily closed a major rail route.
- On the positive side, construction sector activity recorded its second consecutive monthly gain, driven by increases in residential and industrial building activities.
- Retail sales were also up in February, posting their largest gain since last May although the increase was not enough to offset the sectors large decline in January, suggesting that growth in consumer purchases of goods will remain soft in the first quarter.
- This morning’s GDP report is inline with our most recent forecast that expects economic growth to remain soft in the first quarter. With the economy growing below its potential, price pressures will remain muted, allowing the Bank of Canada to remain on the sidelines this year.