Real GDP growth hit annual rate of 2.5 per cent in Q1, says StatsCan

Statistics Canada says the economy grew at an annualized rate of 2.5 per cent in the first quarter, the fastest in more than a year.

That was better than already optimistic private-sector estimates and the fastest in six quarters, according to Statistics Canada.

The agency said exports were the largest contributor to growth in the quarter, while domestic demand was at its weakest since the first quarter of 2009.

On a monthly basis, real GDP by industry grew 0.2 per cent in March.

Economists had been expecting 2013 to get off to a strong start, with a consensus estimate of 2.3 per cent annualized growth—up from a meagre 0.6 per cent reported in the last quarter of 2012.

However, the StatsCan data was better than most economists expected.

First quarter export volumes increased 1.5 per cent after a gain of 0.2 per cent in the fourth quarter of 2012 and declines in the previous three quarters.

Imports were up slightly by 0.3 per cent after falling 0.8 per cent in the previous quarter.

Consumer spending was up 0.2 per cent, sustained by higher spending on services.

“While government goods and services spending was also surprisingly firm, growing at a two per cent rate, government capital spending, fell by a two per cent pace,” CIBC World Markets economist Emanuella Enenajor noted.

“Offsetting those gains, residential construction fell by 4.7 per cent while non-residential business investment ticked up mildly 0.7 per cent.

“The household sector was somewhat soft, with consumption up by a mere 0.9 per cent annualized pace. Inventory restocking was a positive for growth.”

The loonie was off the morning’s lows but still down 0.04 of a cent to 97.05 cents US after the announcement.