Auto sector slump stalls economy in April
By Louise Egan
OTTAWA (Reuters) - Canada's economy stalled in April, setting the stage for weak second-quarter growth, as supply disruptions caused by Japan's earthquake and tsunami triggered a slump in the key auto manufacturing sector.
Gross domestic product (GDP) was unchanged in April following 0.3 percent growth in March, Statistics Canada said on Thursday. Analysts surveyed by Reuters, on average, forecast a 0.1 percent decline in April GDP.
Mining sector strength contributed to the slightly stronger-than-expected number. But it was still the second worst monthly performance since September 2010, slightly better than the 0.1 percent contraction in February.
"There was an outsized gain in mining that helped cushion against declines in manufacturing, wholesaling, and financial services," Avery Shenfeld, chief economist at CIBC World Markets, wrote in a note to clients.
"Overall, better than expected but obviously not a good reading in absolute terms, and we expect May to show similar softness."
The slightly stronger-then-expected reading helped the Canadian dollar extend gains against the greenback. The currency firmed to its strongest level in six weeks, boosted primarily by a rally in oil prices and relief that the Greek parliament approved an austerity package.
The Canadian data showed manufacturing production fell 0.7 percent in April following a robust 1.6 percent increase in March, with most of the weakness stemming from the auto sector.
Mining and oil and gas extraction jumped 1 percent and even construction edged up, offsetting the manufacturing declines so that overall goods-producing industries were flat in April. Continued...