The Canadian economy grew a modest 0.2 per cent in February, with early estimates for March indicating little change to the GDP, Statistics Canada said on Tuesday.
The February figures were a tick lower than analysts expected. The economy had a strong January, growing 0.5 per cent (downwardly revised from 0.6 per cent). That was largely thanks to a rebound in educational services after public sector strikes ended in Quebec.
“The start of 2024 looks eerily similar to 2023, when the economy started the year with a bang, only to stall after [the first quarter],” wrote BMO economist Benjamin Reitzes in a note.
The loss of momentum puts additional pressure on the Bank of Canada to start cutting interest rates in June, though a move on the central bank’s part still largely depends on whether inflation continues to cool, Reitzes wrote.
The consumer price index shows inflation was at 2.9% in March compared to the year before, a slight increase compared to February. Statistics Canada said gasoline prices, mortgage interest costs and rent contributed to the increased inflation rate.
StatsCan estimated that the economy expanded at an annualized rate of 2.5 per cent in the first quarter.
Gains in transportation and warehousing
The economic expansion in February came as services-producing industries increased 0.2 per cent, helped by gains in transportation and warehousing.
Transportation and warehousing grew 1.4 per cent, a pace that the data agency said was the largest monthly growth rate since January 2023.
Rail transportation also contributed significantly to that sector’s growth in February, eking out a 5.5 per cent gain as it rebounded from a January cold snap.
Meanwhile, air transportation grew 4.8 per cent as demand for international travel rose, with airlines adding more flights to Asia in the lead-up to the Lunar New Year — and pipeline transportation rose 1.6 per cent, offsetting January’s decline.
Goods-producing industries were essentially unchanged as the mining, quarrying, and oil and gas extraction sector grew and the utilities and manufacturing sectors contracted, according to StatsCan.
The public sector grew at a slower pace in February (0.2 per cent) after a 1.9 per cent increase the previous month.
Overall, the agency recorded growth in 12 out of 20 sectors.
