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The Quick Take: May 1, 2018

GDP Growth in February Thanks To Rebound in Mining, and Oil and Gas Extraction

Cory Renner
Economist
Industrial Economic Trends

“After a disappointing January, GDP rose 0.4 per cent in February. Some of the best news was the strength in manufacturing, which has grown over the last five months. However, the service sector growth has remained soft.”

Real GDP rose by 0.4 per cent in February, representing a 3.0 per cent increase on a year-over-year basis.The monthly gain is the largest since May 2017.

Growth was broad-based, with increases in 15 of 20 industrial sectors. The goods sector grew by 1.2 per cent, while the services sector grew by a modest 0.1 per cent.

The strongest contribution to growth was a rebound in mining, quarrying and oil and gas extraction, which rose by 2.4 per cent after declining 2.9 per cent in January.

Strong growth was also observed in arts, entertainment and recreation (up 1.3 per cent), manufacturing (up 1.0 per cent) and construction (up 0.7 per cent).

Manufacturing strength was led by durable manufacturing, which rose by 1.8 per cent. By industry, the strongest increases were in fabricated metal manufacturing, non-metallic mineral manufacturing and motor vehicle manufacturing.

After declining for three straight months, retail trade creeped up a modest 0.3 per cent.

The impact of softening activity in the housing resale market continues to affect real estate agents and brokers. Output in that industry fell 7.9 per cent.

With February’s report, first quarter GDP growth is tracking above the Bank of Canada’s latest forecast, which lends itself to a rate hike this summer.

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