OTTAWA (Reuters) - Lower oil and gas output caused Canada’s economic growth to come in lower than expected at 0.1 percent in April, according to Statistics Canada data on Monday, extending a tepid performance that economists said could reinforce central bank caution.
It matched March’s rise and undershot market expectations of 0.2 percent growth. However, taken to a second decimal point, growth was actually 0.14 percent. Excluding oil and gas extraction, it was a more respectable 0.19 percent.
Economists said it suggested second-quarter growth of an annualized 2 percent to 2.2 percent, and it might make the Bank of Canada Governor Stephen Poloz revise down his second-quarter estimate of 2.5 percent when he publishes his Monetary Policy Report on July 16.
“Taken together with a slower Q1 (first quarter) outcome, disappointment on growth will give the bank some maneuverability to downplay the recent acceleration in core inflation at the upcoming July meeting,” TD Securities senior Canada macro strategist Mazen Issa commented.
Year-on-year inflation came in at 2.3 percent in April, with core inflation at 1.7 percent, its highest level since July 2012, numbers which had prompted some commentators to say Poloz should tone down concerns over low inflation.
The output of services rose by 0.3 percent while goods-producing industries fell by the same amount. In the goods sector, only manufacturing rose, with mining, oil and gas, agriculture and forestry, utilities and construction all down.
Oil and gas production fell by 0.8 percent during the month, affected by maintenance at some petroleum facilities, Statistics Canada said. Mining and quarrying fell by 1.3 percent. All the data is adjusted for seasonal factors.
Year on year, overall growth stood at 2.1 percent. The central bank has said there would need to be substantially higher growth than that for much progress to be made in eliminating the economy’s output gap — in other words, in moving toward full potential.
The Canadian dollar quickly fell on the data to C$1.0696 to the U.S. dollar, or 93.49 U.S. cents, from C$1.0680, or 93.63 U.S. cents just beforehand. Later in the morning the loonie recouped its losses. [CAD/]
Editing by Jeffrey Benkoe and W Simon