Canada’s economy stalls as oil drilling services hit recession lows | Financial Post
business.financialpost.com
OTTAWA — The Canadian economy stalled in February as a pickup in the retail sector was offset by a decline in manufacturing and a steep drop in support activity for the mining and energy sectors, data showed on Thursday.
If it were a country, the Great Lakes-St. Lawrence region of North America would be ranked as the third-largest economy in the world.
As it is, this huge chunk of resources-rich land — sitting in the north-eastern portions of Canada and the United States — accounts for 30 per cent of the combined economies of both countries, and 31 per cent of all employment, equivalent to 51 million jobs.
The impact of that massive footprint is set to get even bigger, as manufacturers and exporters in Ontario and Quebec take advantage of a weak Canadian currency and stronger U.S. demand, according to a new study by BMO Capital Markets.Keep reading.
The country’s gross domestic product was unchanged in February from the month before, Statistics Canada said, though that topped economists’ expectations for a decline of 0.1 per cent. January was revised down to a decline of 0.2 per cent.
Economists are watching to see how the economy copes with the drop in the price of oil, a major export for Canada. The Bank of Canada cut interest rates in January to protect against the price shock and expects economic growth in the first quarter to be weak before picking up later this year.
The GDP report will likely keep the bank from making policy moves for now, analysts said. Assuming a small increase in March, first-quarter growth is on track for an annualized gain of 0.2 per cent, said David Tulk, chief Canada macro strategist at TD Securities.
“The theme of weakness in the first quarter … is well understood by the bank and the market, leaving the bounce in the second quarter and beyond as the greater source of uncertainty,” Tulk said.
Oil and gas extraction edged up 0.1 per cent in February from January, but support activity for the mining and energy sectors tumbled 15.4 per cent on a drop in rigging and drilling services. That was the biggest decline since March 2009.
Manufacturing activity fell 0.8 per cent, hurt by a decrease in durable-goods manufacturing. Overall, the goods-producing sector declined 0.2 per cent.
The service sector fared better, rising 0.1 per cent. Retail trade climbed 1.5 per cent for its first increase in three months. Gains were broad, including an increase in sales at merchandise stores and at motor-vehicle and parts dealers.
Analysts said harsh winter weather played a hand in February’s economic sluggishness.
Doug Porter, chief economist at BMO Capital Markets, said the drop in manufacturing was due to a decline in auto assembly due to plant retooling.
“The winter months were no treat for Canada’s economy, but it now looks like GDP managed to hold roughly steady through a rough patch for oil and gas and the auto sectors,” he said.
© Thomson Reuters 2015
FP0501_Canadian_GDP_620_AB
Canada’s economy stalls as oil drilling services hit recession lows | Financial Post
business.financialpost.com
OTTAWA — The Canadian economy stalled in February as a pickup in the retail sector was offset by a decline in manufacturing and a steep drop in support activity for the mining and energy sectors, data showed on Thursday.
If it were a country, the Great Lakes-St. Lawrence region of North America would be ranked as the third-largest economy in the world.
As it is, this huge chunk of resources-rich land — sitting in the north-eastern portions of Canada and the United States — accounts for 30 per cent of the combined economies of both countries, and 31 per cent of all employment, equivalent to 51 million jobs.
The impact of that massive footprint is set to get even bigger, as manufacturers and exporters in Ontario and Quebec take advantage of a weak Canadian currency and stronger U.S. demand, according to a new study by BMO Capital Markets.Keep reading.
The country’s gross domestic product was unchanged in February from the month before, Statistics Canada said, though that topped economists’ expectations for a decline of 0.1 per cent. January was revised down to a decline of 0.2 per cent.
Economists are watching to see how the economy copes with the drop in the price of oil, a major export for Canada. The Bank of Canada cut interest rates in January to protect against the price shock and expects economic growth in the first quarter to be weak before picking up later this year.
The GDP report will likely keep the bank from making policy moves for now, analysts said. Assuming a small increase in March, first-quarter growth is on track for an annualized gain of 0.2 per cent, said David Tulk, chief Canada macro strategist at TD Securities.
“The theme of weakness in the first quarter … is well understood by the bank and the market, leaving the bounce in the second quarter and beyond as the greater source of uncertainty,” Tulk said.
Oil and gas extraction edged up 0.1 per cent in February from January, but support activity for the mining and energy sectors tumbled 15.4 per cent on a drop in rigging and drilling services. That was the biggest decline since March 2009.
Manufacturing activity fell 0.8 per cent, hurt by a decrease in durable-goods manufacturing. Overall, the goods-producing sector declined 0.2 per cent.
The service sector fared better, rising 0.1 per cent. Retail trade climbed 1.5 per cent for its first increase in three months. Gains were broad, including an increase in sales at merchandise stores and at motor-vehicle and parts dealers.
Analysts said harsh winter weather played a hand in February’s economic sluggishness.
Doug Porter, chief economist at BMO Capital Markets, said the drop in manufacturing was due to a decline in auto assembly due to plant retooling.
“The winter months were no treat for Canada’s economy, but it now looks like GDP managed to hold roughly steady through a rough patch for oil and gas and the auto sectors,” he said.
© Thomson Reuters 2015
FP0501_Canadian_GDP_620_AB
Canada’s economy stalls as oil drilling services hit recession lows | Financial Post
