Friday, May 29, 2015









Canada's GDP shrank at 0.6% pace in 1st quarter, Statistics Canada says

Oil and gas sector losses more than offset expansion in utilities and finance

By Pete Evans, CBC News Posted: May 29, 2015 8:45 AM ET Last Updated: May 29, 2015 8:13 PM ET
1st quarter downturn 7:40
Canada's economy shrank by 0.1 per cent in the first three months of 2015, as the economic impact of oil's gloom spread to other sectors.
It's the first time the economy has contracted on a quarterly basis since 2011.
Statistics Canada said Friday that many sectors, including  mining, quarrying, and oil and gas extraction, construction, wholesale trade and manufacturing were in negative territory for the three months between January and March.
There was growth in finance and insurance, utilities, as well as the agriculture and forestry sectors, but not enough to offset weakness everywhere else.
Expressed as an annualized rate, GDP contracted 0.6 per cent in the first quarter.
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Canada's economy shrank at an annualized pace of 0.6 per cent in the first quarter, Statistics Canada said. That's the first quarterly decline we've seen in almost four years. (Norm Betts/Bloomberg)
"While the headline number was bad, the underlying details were worse," TD Bank economist Randall Bartlett said, adding the weak number makes it more likely the central bank will move to cut rates again some time this year.
Bank of America's economist Emanuela Enenajor agrees with that assessment, saying in a note that "October is still our base-case for a cut, but persistently weak data could put a July ease on the table."
For comparison purposes, the U.S. economy shrank by 0.7 per cent over the same period, according to updated numbers that also came out Friday
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The loonie reacted swiftly to the bleak number, shedding about half a cent to trade below 80 cents US early Friday.


Another first-quarter shocker: U.S. GDP falls 0.7%

Published: May 29, 2015 2:11 p.m. ET

Economy shrinks instead of rising 0.2%, revised data show

WASHINGTON (MarketWatch) — The economy contracted in the first quarter for the second straight year, a disappointing start that could foil the chance of the U.S. reaching 3% growth in 2015 for the first time in a decade.
Gross domestic product — the value of everything a nation produces — shrank by 0.7% annual rate from January to March, the Commerce Department said Friday. Last month the government originally had reported a tepid 0.2% increase in GDP.
The big markdown in the economy’s performance stemmed from a smaller inventory buildup and higher imports than preliminary data showed. Consumers, for their part, spent at moderate rate and businesses cut overall investment except in residential housing.
Wall Street was prepared for a negative number. Economists surveyed by MarketWatch had expected GDP to be revised to show a 1% decline.
Investors are likely to brush off the weak report, focusing more on the current trajectory of the economy.
“While the impact of declining investment in the energy sector and a deteriorating trade balance is still highly visible, the rest of the U.S. economy is probably doing OK,” said Scott Anderson, chief economist of Bank of the West.
Fresh evidence points to a pickup in U.S. growth, but perhaps not quite as fast as hoped. The MarketWatch survey estimates GDP will increase 3.2% in second quarter, though a new tracking tool created by the Atlanta Federal Reserve puts the gain at just under 1% with a month to go.
The economy has been bolstered by an upsurge in hiring over the past year, along with scattered signs of rising wages. Companies have hired nearly 4 million workers since 2014, driving the official unemployment rate down to a seven-year low of 5.4%.
These newly employed workers are spending more money, though not lavishly so, to help to keep the wheels of the economy turning. Consumer spending accounts for up to 70% of U.S. economic activity.
In the first quarter, consumer spending rose at a 1.8% clip, down a tick from the original reading. Americans spent a bit less on cell-phone service than initially reported.
The increase in spending, however, was well below the 2.4% average since the U.S. recovery firmly took root in 2010. Unless consumers spend more, the economy is unlikely to grow much faster in light of new headwinds such as a strong dollar and renewed weakness in business investment.

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