2016.05.0201:07:00UTC+00Canada’s Economy Likely to Post Above 3 Pct Growth in Q1 Despite Weak February Data

Canada’s GDP shrank on month-on-month basis in February, declining 0.1%, following four consecutive months of growth. Good-producing industries were mainly led the decline in output, whereas service sectors were flat. The Canadian economy had performed quite strongly in January, while the goods-producing industries saw a strong growth. However, one month’s contraction does not make a trend. The economy is likely to grow steadily in the following months and quarters, according to TD Economics.

The Canadian economy is expected to post a strong annualized growth of above 3% in Q1 2016 in spite of the weak February data, noted TD Economics. This is mainly due to the strong figures observed in January. But looking at this month’s report, the solid performance is not expected to be repeated.

The Canadian economy is still going through an adjustment process. This is expected to result in the economy expanding at a rate of around 2% or less every quarter, added TD Economics. Furthermore, the overall country’s figure is likely to cover the diverging growth paths region wise as the regions producing commodity continue to struggle with reducing investment and low prices, noted TD Economics.

Within goods-producing industries, agriculture fell -1.3%, utilities declined 0.2%, mining and quarrying dropped 0.8%, and manufacturing fell 0.8% in February. Meanwhile, construction rose slightly by 0.1%. Major subcategories within manufacturing declined in the month. In service sectors, wholesale trade dropped sharply by 1.8%, which as countered by retail sales’ strong growth of 1.4% in February.