OTTAWA (Reuters) -Canada’s economy grew at an annualized rate of 3.1% in the first quarter, exceeding analysts’ expectations as well as the Bank of Canada’s projection, Statistics Canada data showed on Wednesday.
Real GDP was unchanged in March, and likely rose 0.2% in April, the statistics agency said.
Analysts surveyed by Reuters had forecast annualized growth of 2.5% in the quarter and a decline of 0.1% in March.
The increase was more robust than the Bank of Canada’s 2.3% growth projection, and could pressure the bank to hike interest rates after other data this month also showed the economy was hotter than anticipated.
The central bank has hiked its key overnight rate by 425 basis points to 4.5% between March of last year and January. It has since kept rates on hold, but warned that rates could go higher.
The economy benefited from favorable international trade and household spending growth in the quarter ending in March, while slower inventory accumulations as well as housing investment decline were among moderating factors, Statscan said.
Exports of goods and services, led by cars and light trucks, rose 2.4% in the quarter, outpacing a 0.2% increase in imports.
Canadian households spent more on new trucks, vans, and sport utility vehicles and on semi-durables like garments in the quarter, while spending on non-durable goods declined slightly.
Spending also picked up for food and non-alcoholic beverage services and alcoholic beverage services, Statscan said.
In an advance estimate for April, Statscan said increases in sectors including mining, quarrying, and oil and gas extraction and transportation and warehousing were partially offset by declines in the wholesale and retail trade and public administration sectors.
The Canadian dollar was trading 0.3% lower at 1.3635 to the greenback, or 73.34 U.S. cents, as oil prices tumbled for a second day.
(Reporting by Ismail Shakil in Ottawa; Additional reporting by Fergal Smith in Toronto and Dale Smith in Ottawa; Editing by Toby Chopra and Bernadette Baum)
