Economy grows at 3.7% annual pace in Q1

OTTAWA — Canada’s economy picked up steam in the first three months of this year, driven by consumer spending, a turnaround in business investment, and the housing market, the national statistics agency said Wednesday.

Statistics Canada said real gross domestic product grew at an annualized rate of 3.7 per cent in the first quarter in a broad-based expansion.

Bank of Montreal chief economist Doug Porter called it “a pretty impressive result.”

“We’ve now had three quarters in a row of quite solid activity in Canada, so this is not a flash in the pan by any means. It does look like the economy is moving beyond the oil shock,” Porter said.

He said he’s now predicting growth for this year will come in at about 2.7 per cent, compared with an earlier prediction of 2.5 per cent.

“It’s not a big change, but every turn of the screw helps,” Porter said.

Despite the increase in the pace of growth, it was below expectations. Economists had estimated annualized growth of 3.9 per cent, according to Thomson Reuters.

And TD Bank senior economist Brian DePratto said there are issues lurking beneath the surface, including evidence that housing markets are beginning to cool off.

“At the same time, the environment for business investment should remain supportive, but elevated uncertainty is likely to cap the pace of growth,” he said in an analyst note.

“Consumers are likely to keep their wallets open, helped by past gains in housing wealth. But, it is again unlikely that the pace of first quarter growth, particularly for durable goods spending, can be maintained, and the credit-fuelled nature of recent spending growth remains concerning.”

In a separate report Wednesday, the International Monetary Fund said the Canadian economy has regained momentum, but that the risks to the outlook are significant. It raised concerns about household debt and the possibility of a correction in the housing market.

The IMF also said business investment remains weak, non-energy exports have underperformed and housing market imbalances have risen.

“Macroprudential policy needs to protect the resilience of the household and banking sector,” the IMF said.

It suggested a further tightening of tax-based measures to mitigate speculative investment in the housing sector and called for greater co-ordination between federal and provincial regulators.

Canadian economic growth in the first quarter came on multiple fronts.

Business investment in residential structures rose 3.7 per cent, boosted by new construction, the strong real estate market in Ontario and a gain in renovation activity.

After falling in four of the previous five quarters, investment in machinery and equipment advanced 5.8 per cent. Household final consumption increased 1.1 per cent, led by vehicle purchases.

However, Porter noted that exports were an area of key weakness in the GDP report.

“That is to me the one serious blemish in this report,” he said. “That is a serious, legitimate concern and it’s something the Bank of Canada is obviously concerned about.”

Growth in March was stronger than expected, with GDP growing 0.5 per cent, above estimates of 0.2 per cent. Goods-producing industries climbed 0.9 per cent, while service industries added 0.3 per cent.

Overall annualized growth figures for the second half of 2016 were also revised higher Wednesday. The figures for the third and fourth quarters were increased to 4.2 per cent and 2.7 per cent compared to earlier readings of 3.8 per cent and 2.6 per cent, respectively.

Just Posted

New Alberta dental fee guide calls for 8.5% reduction in fees

A new dental fee guide has been announced in Alberta that the… Continue reading

Lacombe ready to light the night

The Christmas spirit comes to Lacombe Thursday night with the start of… Continue reading

Opioid prescriptions up across country, but daily doses dispensed down: report

TORONTO — The overall number of prescriptions for opioids has increased over… Continue reading

Notley pleads with political foes, allies to support Alberta pipeline projects

OTTAWA — Alberta Premier Rachel Notley issued warnings to all political parties… Continue reading

Uber isn’t saying how many Canadians were affected by year-old hack

TORONTO — Uber is owning up to a year-old security breach that… Continue reading

VIDEO: Replay Red Deer: Nov. 19

Watch news highlights from the week of Nov. 13

Creationist will speak at home-schooling convention in Red Deer

Ken Ham has debated Bill Nye on the Earth’s origins

Update: Innisfail girl found

A 15-year-old missing Innisfail girl has been located safe and sound. Police… Continue reading

Cost to fix Phoenix pay system to surpass $540 million, auditor general says

The federal government’s chronic salary struggles will take more time and more… Continue reading

Red Deer Christmas Bureau to help 1,300 children this year

Demand is high, but Red Deer always provides

CP Holiday train makes stops in Central Alberta

The popular train will feature entertainment from Colin James and Emma-Lee

Kittens rescued after allegedly being tossed from vehicle

Couple finds abandoned kittens new home through Facebook

VIDEO: ‘Party bus’ goes up in flames in Vancouver

Fire crews responded to the late night blaze

Chicken crosses B.C. road, stops traffic

Rooster makes early morning commuters wait in Maple Ridge

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month