OTTAWA — Canada's economic recovery accelerated in January at the fastest pace in three years, led by the manufacturing, construction and wholesale sectors, Statistics Canada reported Wednesday.
The federal agency said gross domestic product grew by a more-than-expected 0.6 per cent during the month, marking the fifth consecutive monthly increase, and the biggest jump since December 2006. However, the agency revised its December GDP reading to 0.5 per cent from 0.6 per cent.
Most economists had expected GDP to grow 0.5 per cent in January.
"These are unambiguously strong results, with GDP now rising at a whopping 6.9 per cent annual pace over the November-to-January period," said Douglas Porter, deputy chief economist at BMO Capital Markets. "And the economy has already recouped more than half of its recession losses, with GDP now up by 2.7 per cent from last May's low".
The Canadian dollar was trading at 98.50 cents U.S. after the GDP report, up from Tuesday's close of 98.09 cents U.S..
Statistics Canada said the manufacturing sector grew 1.9 per cent in January, after posting a 1.2 per cent gain the previous month. The construction industry saw 1.7 per cent growth in January.
Wholesale activity advanced 2.9 per cent, with increases in all trade groups except for apparel and alcohol and tobacco products. "The most notable increases were in motor vehicles, petroleum products, pharmaceuticals and food products," the said.
Porter said the recovery "is becoming more fully entrenched and is showing surprising strength, with the goods-producing sector in full rebound mode".
"Importantly, the recovery looks to be broadening beyond the initial push in housing and consumer spending, as manufacturing has advanced for five straight months," he sad. "With today's result, Q1 growth is now set to top Q4's five per cent growth rate".
Porter added that "the early read on February GDP looks good too." He said February saw 60,000 full-time jobs added to the economy, while housing starts soared 70 per cent year-over-year and auto sales jumped by an annualized 25 per cent.
The Bank of Canada's forecast of 3.5 per cent growth for the first quarter of 2010 "is fading into the sunset," he said.
TD Securities' Eric Lascelles said "barring some major unexpected economic shock, it is hard to imagine the Bank of Canada raising rates any later than July, and it must be conceded that June is at least theoretically possible, especially given governor (Mark) Carney's most recent speech".
The Vancouver Sun
