June 28, 2013 / 12:53 PM / 5 years ago

Sluggish April GDP confirms Canadian economy is slowing

OTTAWA (Reuters) - Canada’s economy grew by just 0.1 percent in April from March, Statistics Canada said on Friday, confirming that after a strong first quarter, growth is slowing amid continuing global economic uncertainty.

Shelves are stocked at Target's store in Guelph, Ontario, March 4, 2013 as the American retail giant prepares to open its first three pilot stores in Canada on March 5. REUTERS/Geoff Robins

Although April marked the fourth consecutive month-on-month gain, it was the smallest of the four increases. The figure matched analysts’ expectations.

“(This) is no big surprise and fully consistent with the slow-motion expansion Canada now finds itself in. The modest April gain almost precisely matches the average increase seen over the past year,” BMO Capital Markets chief economist Doug Porter said in a note to clients.

The Bank of Canada forecasts that second-quarter growth on an annualized basis will be 1.8 percent, down from the 2.5 percent in the first quarter.

The output of service industries expanded by 0.3 percent in April. Goods production fell by 0.3 percent on a decline in mining, quarrying and oil and gas extraction.

Porter and other analysts said second-quarter growth would be also hurt by major floods that hit Canada’s oil capital last week, as well as a construction strike in the province of Quebec.

The Canadian dollar briefly pared its losses following the release of the data, before weakening back to C$1.0500, or 95.23 U.S. cents. It finished Thursday’s North American session at C$1.0475 versus the U.S. dollar, or 95.47 U.S. cents.

The report showed wholesale and retail trade advanced by 0.6 percent and 0.5 percent, respectively, while the finance and insurance sector grew by 0.6 percent.

Manufacturing grew by 0.2 percent with durable goods output up by 0.5 percent on gains in computer and electronic products. Non-durable goods production dropped by 0.3 percent on declines in petroleum and coal products.

“The domestic economy is likely to remain subdued, which will prevent headline growth from moving materially above its trend rate,” said TD Securities chief Canada macro strategist David Tulk.

Canada relies heavily on the economy of the United States, where the most recent data on consumer spending and jobs data suggests lukewarm growth.

Separately, Statscan said producer prices were unchanged in May from April as higher prices for petroleum and coal products offset declines in primary metal product and lumber prices. Analysts had estimated a 0.1 percent increase.

Petroleum and coal products climbed by 1.1 percent after two consecutive declines, pushed higher by a 3.6 percent increase in the price of gasoline.

Primary metal products slipped by 1.1 percent in part due to lower prices for gold, gold alloys, silver and platinum. Raw materials prices rose by 0.2 percent.

With additional reporting by Andrea Hopkins in Toronto; Editing by Jeffrey Hodgson and Steve Orlofsky

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