Canada's GDP expands at faster rate

Canada's real GDP expanded by one per cent between January and March, faster than the 0.8 per cent pace of expansion in the last three months of 2010.

Both exports and imports were higher, Statistics Canada reported Monday. The former expanded by 1.6 per cent; the latter by 2.2 per cent.

Expressed at an annualized rate, real GDP grew 3.9 per cent in the first quarter, after expanding 3.1 per cent in the fourth quarter of 2010. By comparison, real GDP in the United States grew 1.8 per cent in the first quarter.

The strong showing was actually just under the four per cent that economists were expecting. The Bank of Canada's latest forecast was calling for 4.2 per cent growth in the quarter.

Real GDP declined by 0.1 per cent in February, but a 0.3 per cent rebound in March was more than enough to offset that. The monthly uptick was slightly above what economists were expecting.

Almost all major industrial sectors of the economy increased output in the first quarter, but manufacturing as well as mining and oil and gas extraction were the largest contributors to growth. Construction, transportation and wholesale trade also recorded notable increases.

Consumer spending flat

Goods production rose 1.8 per cent while service-producing industries increased 0.7 per cent.

The GDP report also showed that consumer spending was flat in the period.

"Glancing at the details, consumer's nearly stalled, after a solid quarter earlier performance," CIBC World Markets wrote in a note.

"Offsetting that, business capital spending showed solid momentum, advancing by about 10 per cent in annualized terms with housing posing a modest increase after a decline in the preceding quarter."