Household spending, exports drive economy past expectations with 4.5% growth
Exports in goods and services rose 2.3%, while the export of energy products increased 9.2%.
OTTAWA — The economy surged past second-quarter expectations with growth at an annual rate of 4.5%, giving the country its best start to a calendar year since 2002, Statistics Canada said Aug. 31.
Household spending and exports, particularly in the form of energy products, drove the increase in real gross domestic product, the agency said.
The sturdy GDP data provides the latest evidence the 2017 momentum has continued to build and arrives with the Bank of Canada widely expected to once again hike its benchmark rate in the coming weeks.
Citing the strengthening economy, the central bank raised its rate to 0.75% from 0.5% in July. That was its first rate hike in seven years. Its next rate announcement is scheduled for next week.
The report showed exports expanded 2.3% from April to June, up from 0.4% in the first three months of the year. Exports in goods and services rose 2.3%, while the export of energy products increased 9.2%.
Households spent 1.9% more on goods in the second quarter – the strongest gain since 2007.
Overall, the quarterly increase came even though housing investments contracted 1.2% during a period that saw the introduction of a new Ontario tax on foreign buyers in April. In comparison, residential real estate expanded 2.9% in the first quarter.
A consensus of economists had predicted Canada to deliver a second-straight growth reading of 3.7%, according to Thomson Reuters. The Bank of Canada had predicted second-quarter real GDP to expand by three per cent in its latest forecast, released in July.
Combined with the 3.7% expansion over the first three months of 2017, Statistics Canada said the country saw its strongest six-month start to a calendar year in 15 years. The data also shows the last time quarterly growth climbed as high as 4.5% was in the third quarter of 2011 when it hit 5.7%.
The second-quarter acceleration was fuelled by an eighth-consecutive monthly increase in June that included a two per cent expansion in the construction sector – its largest gain in four years. The report said 14 of 20 industrial sectors saw growth in June.