- CIBC World Markets
Canada's economy contracted for the first time in five months in February, as the manufacturing, mining and energy sectors all shrank. Canada's gross domestic product edged down 0.1% to 1.67 trillion Canadian dollars in February after advancing 0.6% in January, Statistics Canada reported. The wholesale trade, which dropped 1.8% in the reported month was the biggest contributor to the overall decline in February economic output. The manufacturing sector, which policy makers expect to benefit from the relatively weaker Canadian Dollar and US economic growth, decreased 0.8% in February, led by a steep fall in transportation equipment. It was the sector's first decline in four months. After dropping sharply in 2015 and early 2016, the Canadian Dollar has regained some of its strength recently and is now trading at close to 80 US cents.
Even with the monthly decline, first-quarter GDP growth is likely come in at 3.4%, which would be the most since 2014. Meanwhile, on an annual basis, the Canadian economy grew 1.5%. Canada's liberal government, led by Prime Minister Justin Trudeau, said it will increase infrastructure spending and introduce new tax measures, which it projects should increase economic growth by 0.5% in the 2016-2017 fiscal year, and by 1% the following year. Bank of Canada Governor Stephen Poloz called those estimates feasible.
© Dukascopy Bank SA