March 1, 2013 / 1:49 PM / 5 years ago

Canada chalks up another quarter of weak growth

OTTAWA (Reuters) - Canada’s economy grew at a sluggish pace in the final quarter of 2012 after a similarly disappointing third period, resulting in the weakest six months since the 2008-09 recession, Statistics Canada data indicated on Friday.

Buildings are seen in the financial district in Toronto, January 28, 2013. REUTERS/Mark Blinch

The slowdown will likely add pressure on the Bank of Canada to keep stimulus in place for longer and weigh on the Conservative government as it prepares its next budget.

Gross domestic product expanded by 0.6 percent, annualized, Statistics Canada said, as inventory accumulation slowed sharply and the manufacturing sector retreated.

It was the worst performance since the second quarter of 2011, when the economy contracted 0.8 percent in the aftermath of the Japanese earthquake and tsunami. Excluding that extraordinary effect, the last time the economy fared worse was at the end of the recession in the second quarter of 2009, when it shrank 3.6 percent.

Statscan revised third-quarter growth to 0.7 percent from 0.6 percent previously.

The fourth-quarter figure was in line with forecasts. Market players had cut their targets in recent weeks after a spate of downbeat data.

In December the economy shrank 0.2 percent, also matching forecasts, in the first monthly decline since February on weakness in manufacturing, retail trade and utilities.

Businesses stockpiled only about C$5.7 billion in inventories in the fourth quarter, compared with C$13.5 billion in the third period, Statscan said.

Consumer spending was the main driver of growth, increasing 0.7 percent for the second straight quarter. Business and government capital investment also increased and trade provided a slight boost.

The mining and oil and gas industries contributed most to growth in the quarter, partially offset by manufacturing.

In 2012 as a whole, Canada’s economy expanded 1.8 percent, down from 2.6 percent in 2011.

Reporting by Louise Egan and Alex Paterson; Editing by Jeffrey Benkoe

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