-Doug Porter, chief economist at BMO Capital Markets
Canada's economic growth unexpectedly fell in April, hurt by a decrease in activity in the mining and oil and gas extraction industry, according to Statistics Canada. The nation's gross domestic product declined 0.1% in April from the previous month, compared with economists' expectations for a 0.1% gain, and marking the fourth monthly decrease in a row. The Canadian economy shrank in the first quarter at its worst pace in almost six years, undermined by the decline in oil prices. Nevertheless, economists and Bank of Canada's policy makers expect the economy to gather momentum, starting with the second quarter. Oil and gas extraction plummeted 3.4%, largely due to a drop in the non-conventional oil extraction sector, which saw maintenance shutdowns and production difficulties in April. Mining and quarrying also plunged 3.4%. Nevertheless, activity in the support industries around mining and oil and gas extraction rebounded after four straight months of decline, surging 9.9%. A 1.6% climb in wholesale trade helped offset some of the weakness elsewhere, though retail trade declined 0.2%. Measured on an annual basis, the Canadian economy grew at the pace of 1.2%, compared with the 1.5% rise in March.
The BoC is expected to keep interest rates unchanged at 0.75% at its next meeting in mid-July, when it will also provide an updated economic outlook.
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