The economy blew past projections by expanding at an annualized pace of 3.7 per cent in the second quarter, giving Canada its strongest three-month stretch of growth in two years.
Statistics Canada’s reading for real gross domestic product showed an unexpectedly solid turnaround for an economy that was coming off its weakest back-to-back quarters of growth since 2015.
The economy rode a powerful, broad-based rebound in goods exports in the second quarter, the agency said Friday in a new report.
Energy products grew 5.9 per cent after posting a three per cent decline in the first quarter, while farm and fishing products expanded 15.2 per cent following a 8.4 per cent contraction and non-metallic minerals rose 19 per cent for their strongest quarter in almost three years.
Housing investment expanded 1.4 per cent following five-consecutive quarters of declines.
The headline GDP number was also supported by a one per cent drop in import volumes, compared with a 2.1 per cent increase in the first quarter.
The report showed business investment declined 4.3 per cent after a posting 3.4 per cent increase in the first three months of 2019, while household spending slowed to 0.1 per cent, down from 0.7 per cent growth in the previous quarter.
Overall, the second quarter gave Canada its fastest pace of growth since it posted 4.4 per cent in the second quarter of 2017.
Statistics Canada also revised its first-quarter growth number to 0.5 per cent, up slightly from the initial reading of 0.4 per cent.
On a month-to-month basis, the report said the economy expanded 0.2 per cent — Canada’s fourth-straight month of growth.
Experts had been predicting a more modest second-quarter rebound after a sudden deceleration in growth over the winter that nearly saw the economy grind to a halt. The slowdown at the turn of the year was caused in large part by a sharp decrease in oil prices.
Economists had expected growth at an annualized rate of three per cent for the second quarter, according to the financial markets data firm Refinitiv.
The Bank of Canada had predicted the weakness would be temporary and had projected a second-quarter turnaround of 2.3 per cent.
Encouraging numbers about the health of Canada’s domestic economy have been arriving as global economic conditions become more uncertain.
There has been mounting evidence of a slowing global economy — mostly a consequence of the deepening U.S.-China trade war.
The Bank of Canada will be forced to consider the external and trade-related risks next Wednesday when it delivers its latest interest-rate announcement.
The global environment has dimmed since the central bank’s most recent public comments in early July. At the time, it underlined the resilience of the domestic economy and appeared to be in no hurry to adjust its policy, even as other central banks were poised to lower rates to respond to the already darkening international outlook.
Andy Blatchford, The Canadian Press