Canada's First-quarter Growth Disappoints At 3.1%, April GDP Seen Up 0.2%

Canada's economy grew at an annualized rate of 3.1% in the first quarter, missing expectations but in line with central bank projections, while real GDP climbed 0.7% in March and likely rose 0.2% in April, Statistics Canada data showed on Tuesday.

Analysts surveyed by Reuters had expected first-quarter annualized growth of 5.4% and a gain of 0.5% in March. The Bank of Canada in April projected first quarter growth of 3.0%, rising to 6.0% in the second quarter.

Quarterly growth slowed compared to the previous two quarters on a drop in international export volumes, down 2.4%, Statscan said. Lower oil and gas production in the quarter weighed, as GDP tracks volume not prices, which surged in the quarter on Russia's invasion of Ukraine.

Domestic demand rose by 1.2% compared with 0.9% in the fourth quarter of 2022. Household spending increased, with outlays for goods at their highest level in five years, excluding a third quarter 2020 pandemic-related swing.

Housing continued to push up economic activity, with renovations, resale costs and new construction all increasing. Canadians, however, added less mortgage debt compared with the fourth quarter of 2021, as interest rates began to rise.

Compensation for employees rose 3.8%, the largest quarterly gain since 1981, excluding the pandemic swing, and up from 2.0% in the fourth quarter of 2021.

"Average wages rose along with increased economic activity and employers' efforts to attract qualified workers by offering higher salaries," Statscan said, adding the growth was "throughout the economy."

The Canadian dollar was trading 0.2% lower at 1.2682 to the greenback, or 78.85 U.S. cents.