Household spending grew 0.3 percent in the first quarter of 2018, the slowest pace since the first quarter of 2015. Growth was driven by increased outlays on services (+0.5 percent). Household spending on goods was unchanged, following 11 consecutive quarterly increases.
Investment in machinery and equipment rose 4.2 percent, with medium and heavy trucks, buses and other motor vehicles (+12.5 percent) and industrial machinery and equipment (+3.9 percent) contributing to the growth. Intellectual property products rose 3.3 percent, as mineral exploration and evaluation (+8.0 percent) rebounded and software (+3.2 percent) accelerated. Investment in non-residential structures increased 1.5 percent.
Investment in housing fell 1.9 percent, the largest decline since the first quarter of 2009, due to a drop in ownership transfer costs (-13.5%). Lower resale activity coincided with new mortgage stress measures introduced nationwide in January. Business outlays on new construction slowed to 1.2 percent growth, while renovations increased 1.4 percent.
Businesses added CAD 15.2 billion to their inventories in the first quarter, following an accumulation of CAD 15.9 billion in the previous quarter. Wholesalers (+CAD 5.4 billion), manufacturers (+CAD 4.0 billion) and retailers (+CAD 2.6 billion) all added to their stocks. Farm inventories grew by CAD 567 million, compared with an accumulation of CAD 2.7 billion in the fourth quarter of 2017. The economy-wide stock-to-sales ratio increased from 0.760 to 0.765 in the first quarter.
Export volumes rose 0.4 percent after increasing 1.0 percent in the fourth quarter of 2017. Exports of crude oil and crude bitumen (+9.9 percent) largely contributed to the gains. Exports of services grew 1.7 percent in the first quarter, following a 1.3 percent increase in the previous quarter. Imports rose by 1.2 percent in the first quarter, with similar increases in goods and services.
Growth in imports of goods was led by passenger cars and light trucks (+5.9 percent), tires, motor vehicle engines and parts (+6.0 percent) and basic chemicals and industrial chemical products (+8.6 percent).Imports of services rose 1.1%, as those of commercial (+1.3 percent), transportation (+1.4 percent) and travel (+0.6 percent) services all increased.
Business investment in machinery and equipment (+4.2 percent) and intellectual property products (+3.3 percent) increased at a faster pace than in the fourth quarter of 2017.