OTTAWA, March 29 (Reuters) – The Canadian economic system grew via a wonder zero. Three percent in January, reversing recent declines as the development and production sectors picked up, and possibly leaving the Bank of Canada at the sidelines over the approaching months.
Canadian gross home product improved via 0.3 percent in January from December, completely offsetting lower back-to-back 0.1 percentage declines in the final months, Statistics Canada stated on Friday. The expansion beat analyst forecasts of a flat month.
The stronger-than-predicted month positioned the first sector at the course of modest boom and temporarily quashed fears of a looming recession, analysts said, though it changed into not going to exchange the Bank of Canada’s careful stance on price hikes.
“While we’re still concerned approximately some of the alternative headwinds swirling across the outlook for the time being… This result certainly shows a few severe underlying resiliency within the financial system,” stated Doug Porter, leader economist with BMO Capital Markets, in a observe.
The Bank of Canada warned earlier this month that the Canadian economic system might be weaker inside the first half of 2019 than previously projected, and stated there was “increased uncertainty” around the timing of destiny charge hikes.
Before the release of the month-to-month GDP statistics, cash markets were pricing in a 70 percentage threat of a fee cut via 12 months give up. After the statistics, the chance had fallen to approximately 50 percentage.
The Canadian dollar rallied to a one-week high at 1.3342 to the U.S. Dollar on the information.
While oil and fuel extraction become predicted to weigh in January, the resources dip become less sharp-than-predicted at three.1 percent. Oil sands extraction fell with the aid of four.1 percentage as Alberta’s compelled production cuts – aimed at drawing down volumes in the garage and boosting prices – came into impact.
“The worst must be over for the power enterprise as manufacturing curtailments are gradually scaled returned and manufacturers advantage from better charges,” said Josh Nye, senior economist with Royal Bank of Canada, in a notice.
The goods-producing industries rose by using zero.Six percent, led by using growth in production and production, while the provider-generating industries rose zero.2 percent.
Non-long lasting production rose by using 1. Nine percentage, its strongest increase fee in seven months, Statistics Canada said, while long-lasting production rose 1.2 percent.
The construction area, meanwhile, increased using 1.9 percentage in January, reversing seven months of declines and posting its most massive monthly advantage considering that July 2013.
In separate facts from Statistics Canada, Canadian producer prices rose using zero.3 percentage in February, pushed using higher charges for strength and petroleum merchandise.
Additional reporting using Dale Smith in Ottawa and Fergal Smith in Toronto Editing via Nick Zieminski and David Gregorio