- Doug Porter, BMO Financial Group's chief economist
The Canadian economy expanded in the second quarter, after being knocked down in the beginning of the year, as household spending and exports fuelled the strongest quarterly economic growth in more than two years. On an annual basis, Canada's GDP rose 3.1% in the three months through June, beating experts forecasts for a 2.7% growth and following the meagre 0.9% growth rate in the first three months of the year, when harsh winter weather battered the nation's economy. According to StatsCan, consumer spending was robust, particularly on durable goods, turning in the strongest performance since the second quarter of 2013. Meanwhile, exports soared 4.2% in the April-June period, translating into an annualized rate of 17.8%, following a slight drop in the first quarter. This is the last significant data release officials at the Bank of Canada receive before they consider their policy stance this week.
It is possible the second quarter will show a turning point in the North American economy. The U.S. grew at an annual rate of 4.2% in the second quarter, suggesting strong demand from Canada's largest trading partner. The prospects of steady sales could encourage businesses to overcome their caution and boost investment. However, the Bank of Canada will not shift its policy stance until it sees proof of that.
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