Ontario economy grew 0.9 percent in fourth-quarter

Thu Apr 14, 2011 11:43am EDT
 
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By Claire Sibonney and Jeffrey Hodgson

TORONTO (Reuters) - Ontario's economy grew 0.9 percent in the fourth quarter, boosted by a 3.1 percent rise in exports, marking its sixth-consecutive quarterly gain since the Canadian province was hammered by the financial crisis.

Ontario, which has the largest population and economy of Canada's 10 provinces, said its economy grew 2.8 percent last year, recovering after two years of decline during the recession.

Fourth-quarter exports were boosted by a 5.8 percent rise in sales of international merchandise, including industrial goods and materials, machinery and equipment. Ontario is the center of auto manufacturing in Canada and has benefited from the sector's recovery.

More recent data on Thursday showed Canadian factory sales recorded their biggest slide in 18 months in February as the strong Canadian dollar hit exporters.

On the upside, Ontario Finance Minister Dwight Duncan noted the currency's rise to three-year highs had made it cheaper for factory owners to retool plants with imported machinery.

"We're seeing manufacturers investing in new machinery and equipment which makes our economy more productive," he told reporters, adding that the strong currency was an economic risk he cited in his recent budget.

The province's latest economic report on Thursday showed business investment on plant and machinery increased 1.7 percent in the fourth quarter, after gaining 8.5 percent in the third.

Duncan's budget last month forecast that a tight cap on spending would keep Ontario on track to eliminate its deficit by 2017-18, even as it boosts education and healthcare funding.

(Editing by Rob Wilson)