Canada's economy grows by 2.2% annualized rate in first quarter

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4 days ago

TORONTO (Reuters) -Canada's economy grew faster than expected in the first quarter, expanding by a 2.2% annualized rate, data showed on Friday.
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COMMENTS
ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS
"While headline GDP growth was solid in Q1, it was flattered by a surge in exports as companies looked to front-run potential US tariffs. Domestic demand was weak during the quarter, and monthly data point towards only slight upward momentum heading into Q2."
"Early tracking for Q2 - assuming flat readings for May and June - points towards modest growth of 0.5% annualized. While that would clearly be below the economy's long-run potential, suggesting that slack is building up again, it would be better than the Bank of Canada's April MPR (Monetary Policy Report) scenarios."
DOUG PORTER, CHIEF ECONOMIST, BMO CAPITAL MARKETS
"I think the bottom line here is the economy held up better than most most had expected. We were looking for a decent first quarter but it was better than decent."
"On top of that, and maybe the biggest surprise of all today, is the early reading on April is for a small gain following a similar size one-tenth (of a percentage point) increase in March. That's frankly quite impressive."
"We can take out the details of the first quarter numbers - they're not nearly as strong as the headline would suggest. But still the overall number is nevertheless important here. There's no real sign of distress in the economy from the GDP figures and I think that's the most important message."
"I think this heavily reduces the chances of the Bank of Canada cutting next week."
ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATE STRATEGY AT TD SECURITIES
"I would say the Q1 numbers being a little bit better than expected is a positive development. Some people may focus on that final domestic demand was effectively flat but a lot of that was due to softer government spending. We did see positive business investment and I think that is really important because that was a category we were looking at to suffer in particular due to uncertainty on the trade front."
"We're not yet seeing the signs of a material hit to activity due to trade tensions and for that reason, I think it should be regarded as a positive surprise."
"On the basis of the GDP data, it's difficult to make the case for a rate cut in June."
"Looking forward, we still expect the economy to show some degree of weakness in the middle part of this year. We still look for growth to be essentially flat for Q2 and Q3, which we think will require additional policy easing from the Bank of Canada."