People shop at the Eaton Centre in Toronto, Ontario, Nov. 22, 2022.CARLOS OSORIO/Reuters
The Canadian economy has picked up momentum in the early stages of 2023 and avoided slipping into a recession, despite the highest interest rates in more than 15 years.
Real gross domestic product rose 0.5 per cent in January from the previous month, Statistics Canada reported on Friday. In a preliminary estimate, the agency said the economy grew by a further 0.3 per cent in February.
On an annualized basis, growth is trending upwards of 2.5 per cent in the first quarter – far stronger than the 0.5-per-cent pace that the Bank of Canada had projected. This also marked a rebound from no growth in the fourth quarter, a result that was largely owing to a sharp pullback in inventory investments.
Friday’s report is something of a double-edged sword.
On one hand, the economy is showing resilience and clinging to a potential soft landing that sees inflation brought under control, but without a significant rise in unemployment.
On the other hand, strong domestic demand could complicate the Bank of Canada’s efforts to bring inflation back to 2 per cent.
“The strength of GDP growth in January, and probably February too, suggests the Bank of Canada will use its April meeting to reiterate that, despite the recent banking turmoil, it is still prepared to raise interest rates again if needed,” Stephen Brown, deputy chief North America economist at Capital Economics, said in a note to clients.
In January, there was broad-based strength in economic activity: 17 of 20 industrial sectors posted gains in GDP.
The hospitality sector enjoyed a 4-per-cent jump in activity that month. The transportation and warehousing industry rose 1.9 per cent, after poor weather conditions in December. Mining, oil and gas extraction expanded by 1.1 per cent, bouncing back from unplanned maintenance in December and other temporary setbacks.
Despite the early show of strength, financial analysts expect the economy to slow over the course of the year. The consensus assumption on Bay Street is that Canada will enter a mild recession later in 2023, as businesses and consumers experience the full effects of rapid interest-rate hikes.
The Bank of Canada has raised lending rates to cool the economy and bring inflation under control. The annual inflation rate has eased to 5.2 per cent in February – the peak was 8.1 per cent in June, 2022 – and the central bank expects a further deceleration to around 3 per cent by the middle of the year.
The Bank of Canada is conditionally holding its policy rate at 4.5 per cent to assess the impact of its policy tightening. However, the bank has said it could resume hiking rates if it sees an “accumulation of evidence” that inflationary pressures aren’t subsiding as expected.
After Friday’s report, analysts said the BoC was likely to hold its benchmark interest rate steady at the next decision on April 12.
“There were many indications that the economy got off to a solid start in 2023, but today’s double-barrelled blast of strength is well above even the most optimistic views,” Bank of Montreal chief economist Doug Porter wrote in a client note. “Suffice it to say that if the strength seen in the opening months of the year persists, the BoC is going to find itself in a tough spot.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
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