Canada GDP Growth Beats Expectations In Q1


The Canadian economy advanced 0.9 percent on quarter in the first three months of 2017, following an upwardly revised 0.7 percent expansion in the previous period. Growth was led by a surge in household purchases of vehicles and a rebound in business investment while exports fell. Expressed at an annualized rate, the GDP rose 3.7 percent, beating expectations of 3.6 percent.

Household expenditure rose 1.1 percent, following a 0.7 percent gain the previous quarter. Outlays on goods grew 1.5 percent, mainly boosted by a 2.3 percent rise in purchase of vehicles. Outlays on services went up 0.7 percent. 

Business gross fixed capital formation rose 2.9 percent, following declines in eight of the previous nine quarters (-2.7 percent in the fourth quarter). Growth was driven by housing investment (3.7 percent from 1.5 percent in the previous quartert). New contruction investment increased 3.9 percent while ownership transfer costs grew 5.8 percent, largely due to strong resale activity in the Ontario market. Renovation activity increased 2.1 percent. Business investment in machinery and equipment rebounded (5.8 percent), following declines in four of the previous five quarters. The increase was concentrated in investment in industrial machinery and equipment (4.7 percent), computers and computer peripheral equipment (7.5 percent) and medium and heavy trucks, buses and other motor vehicles (5.8 percent), which were reflected in rising imports for all of these goods.

Businesses accumulated CAD 12.2 billion in inventories in the first quarter, following a draw-down of CAD 2.8 billion in the previous quarter.

Exports of goods and services edged down 0.1 percent, following a 0.2 percent gain in the fourth quarter. Exports of goods were unchanged overall, with increases in motor vehicles and parts (3.8 percent) and farm, fishing and intermediate food products (7 percent) offsetting declines in aircraft and other transportation equipment and parts (-11.7 percent) and metal ores and non-metallic minerals (-8.5 percent). Exports of services were down 0.5 percent, mostly due to a 1.1 percent decline in commercial services. Higher exports of travel services (0.9 percent) partially offset the decline.

Imports of goods and services rebounded with a 3.3 percent increase in the first quarter, offsetting a 3 percent decline in the fourth quarter. Increased imports of goods (3.7 percent) offset a 3.7 percent decline in the fourth quarter. The import of the Hebron oil platform in the third quarter led to 1.2 percent growth in that quarter and the subsequent decline in the fourth. Imports of services rose 1.3 percent in the first quarter.

Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com
5/31/2017 1:02:03 PM