[OTTAWA, ON] – Statistics Canada says the economy grew at an annualized rate of 1.9 per cent in the first quarter, matching the previous quarter's growth rate and indicating the recovery from the last recession has been weaker than hoped.
The report was in line with analyst estimates for the quarter, which were less optimistic than the Bank of Canada's most recent forecast, which suggested the country's central bank was looking for 2.5 per cent annuallized growth.
On a monthly basis, real GDP by industry edged up 0.1 per cent in March – which was below expectations.
The Canadian dollar fell sharply after the report, which was released in Ottawa at the same time as an unexpectedly weak U.S. non-farm payrolls report was issued in Washington, D.C.
The loonie tumbled 0.94 of a cent to a six-month low of 95.87 cents U.S.
BMO Capital Markets economist Robert Kavcic says the March GDP report from Statistics Canada ''doesn't provide a great handoff to the second quarter,'' noting the U.S. payroll report and the European debt crisis make the situation worse.
The U.S. Labor Department reported Friday that American employers created only 69,000 jobs in May, the fewest in a year and far below private-sector forecasts. The government also that U.S. economy created far fewer jobs in the previous two months than first thought.
''Against this backdrop, the Bank of Canada will likely be on hold for the remainder of the year,'' Kavcic writes in a commentary.
The central bank makes its next rate announcement next week. While it was expected to keep its key rate at 1.0 per cent in the short term, there has been much debate about how soon Gov. Mark Carney will be able to raise the rate.
Carney, among others, has said the relatively low interest rates that have been in place for several years now, in order to help the economy, has encouraged consumers to increase household debt to unsustainably high levels.
Statistics Canada says business investment in plant and equipment advanced 1.2 per cent in the first quarter, marking a ninth consecutive quarterly increase.
Housing investment expanded 2.9 per cent, well above the previous quarter's pace of 0.8 per cent.
Consumer spending on goods and services, another main contributor to GDP growth in 2011, slowed to 0.2 per cent in the first quarter of this year after a 0.7 per cent gain in the previous quarter.