Canada’s Economic Growth Lags Forecasts Due to Weak Energy Output

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Canada’s Economic Growth Lags Forecasts Due to Weak Energy OutputCanada’s economy expanded less than analysts had estimated in April after output of products such as energy declined while the services sector such as wholesale grew.

Gross domestic product grew 0.1 percent to C$1.62 trillion (U.S. $1.52 trillion), just like in March, reported Statistics Canada on Monday. Economists in a Bloomberg News poll had expected a growth rate of 0.2 percent.

“The economy has largely run out of excuses” for slow growth, Doug Porter, a Toronto-based chief economist at BMO Capital Markets told Bloomberg. “Today’s reading reinforces the broader picture that the economy isn’t picking up smartly in the spring as some had hoped.”

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Wholesale trading grew the most in the services sector after accelerating 1.3 percent due to increased machinery and equipment and supplies sales. Retail trade advanced 0.8 percent, buoyed by sales of food, clothing and automobiles. Real estate agents recorded a 3 percent gain in output, the third consecutive month of advances.

Mining and energy production fell 0.6 percent in April, partly due to closure of oil refineries for routine maintenance. The construction sector plunged 0.6 percent while production by utility companies declined 1 percent due to decreased demand for utilities.

A keen analysis of the data shows that the gap between services industry growth and decline in manufacturing is a 0.3 percent gain. Analysts expect the Bank of Canada Governor Stephen Poloz to retain the benchmark lending rate at 1 percent on July 16 in order to ensure the economy attains full capacity in 2015.

Canada’s economy expanded by 2.1 percent in the 12 months through April, the same growth posted in March. The central bank forecasts an economic growth of 2.5 percent in the April-June quarter. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com