Canada's economic recovery stalls in April

Wed Jun 30, 2010 10:16am EDT
 
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By Louise Egan

OTTAWA (Reuters) - Canada's economy stalled unexpectedly in April on a slide in retail sales, suggesting the pace of growth is slowing and that the central bank may think twice about raising interest rates again this month.

Statistics Canada said on Wednesday real gross domestic product was flat in the month after seven straight months of expansion and the fastest growth in a decade in the first quarter.

The Canadian dollar sagged after the report, which disappointed market expectations for 0.2 percent growth.

Consumers bought fewer new cars and less clothing in April, sending sales in the retail sector down by 1.7 percent, eroding most of the previous month's gains.

Smaller declines in manufacturing and utilities were offset by gains in mining, wholesale trade and nonresidential construction, Statscan said.

The abrupt slowdown in the recovery made official growth forecasts for the second quarter look unattainable, said Credit Suisse economist Jonathan Basile.

"The weaker-than-expected profile for GDP growth raises the chances that the Bank of Canada pauses its removal of monetary accommodation at the July meeting. This was not our expectation going into today's report," Basile said.

The bank raised its key rate to 0.5 percent from 0.25 percent on June 1 but has given no hints of what its next move, due on July 20, will be.   Continued...

 
<p>Shoppers walk out of a Calgary electronics store in this November 17, 2006 file photo. REUTERS/Todd Korol</p>