Canada's Economy Likely Grew By 5.6% In First Quarter

The Canadian economy most likely grew by 5.6% on an annualized basis in the first quarter, Statistics Canada said on Friday, as growth in February beat expectations and real gross domestic product was seen increasing again in March.

The economy grew by 1.1% in February, ahead of analyst forecasts of 0.8%, on broad-based increases as pandemic measures were loosened. The economy likely grew 0.5% in March, Statscan said in flash estimate, the 10th monthly expansion in a row.

The undoing of Omicron-related public health restrictions, imposed in December and January, reversed the fortunes of client-facing industries in February, said Statscan.

The accommodation and food services sector jumped 15.1%, clawing back nearly all the declines of the previous two months. Transportation jumped as people returned to trains and planes, and the arts, entertainment and recreation sector bounced back.

Construction expanded again, while the real estate sector gained on surging home resale activity. Housing demand also buoyed the finance and insurance industry, as home buyers rushed to lock in mortgages ahead of rate increases.

The strong February results and first-quarter estimate will likely reinforce bets the Bank of Canada will go ahead with another supersized rate rise on June 1. It made a rare 50 basis point increase earlier this month.

The Canadian dollar held onto earlier gains, up 0.5%at 1.2740 to the greenback, or 78.49 U.S. cents.