"A fine quarter ended with a thud, as Canadian GDP got all its momentum from its first month, a signpost of a slowdown ahead".
- Avery Shenfeld, CIBC World Markets
The Canadian economy narrowed in March for a second consecutive month as real gross domestic product grew at a slower-than-expected pace for the first three months of the year. According to Canada's Statistical Bureau the real GDP grew at an annual pace of 2.4% in the first quarter. But despite that growth, the economy contracted by 0.2% in March, following a 0.1% decline in February. Meanwhile, the following data proved to be weaker that majority of economists had expected. Canada is very unusual among major economies in producing monthly data with the economy inevitably subject to high volatility and potentially misleading data.
Meanwhile, weakness in the retail and manufacturing sectors had already been marked by weak monthly data, but will still be an important concern for the Bank of Canada. Taking into account strong damage from the Alberta wildfires as well as oil-production disruption, there will be even more pressure on the non-oil economy to support the economy as a whole thus pushing the bank to consider additional stimulus if there is no evidence of improvement within the next few months.
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