Canada’s economy surprisingly expanded by more than forecast in February, with advanced estimates suggesting the trend continued in March.
Latest Statistics Canada data shows that GDP grew 1.1% between January and February, marking the ninth straight month of gains as 16 out of Canada’s 20 industrial sectors reported gains. The growth coincided with the broad lifting of public health restrictions, while advanced estimates indicate that Canada’s economy expanded another 0.5% in March, marking a 1.4% increase in the first quarter of 2022.
Canada’s accommodation and food services sector bounced back 15.1% in February, offsetting the declines noted in the prior two months. The food services and drinking places category rose 17.6%, while accommodation services were up 8.8%, with traveller accommodation services leading the increase. The construction sector was up 2.7% in February, and the real estate and rental leasing sector expanded 0.4%, as all subsectors were up.
Likewise, finance and insurance grew 0.4%, marking the ninth consecutive month of gains, as homebuyers rushed into the real estate market to take advantage of low interest rates ahead of the Bank of Canada’s forthcoming policy tightening. The country’s mining, quarrying and oil and gas extraction sector expanded 3.4%, following months of stagnation amid lower demand for energy products.
The latest figures will further reinforce the Bank of Canada’s aggressive stance on reigning in its ultra-accommodative monetary policies. Markets are currently preparing for another 50 basis-point interest rate increase at the central bank’s upcoming June meeting, with additional rate hikes likely to ensue, bringing borrowing costs as high as 3% by the end of the year.
Information for this briefing was found via Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
