Canada February GDP falls 0.2%, industrial production drops 0.9%

29 April 2011 22:30  [Source: ICIS news]

TORONTO (ICIS)--Canada’s GDP fell 0.2% in February from January, and industrial production fell 0.9%, marking their first declines since September 2010, a government statistics agency said on Friday.

The decline came after 0.5% and 1.2% increases in GDP and industrial production, respectively, in January from December.

Statistics Canada said February’s GDP decline was mainly caused by a 1.6% decline in manufacturing, in which 16 of the 21 major sectors tracked by the agency reported declines.

“Although the reduction [in manufacturing] was broadly based in both durable and non-durable goods, manufacturers of motor vehicles and associated parts (-7.5%), machinery (-3.3%) and fabricated metal products (-2.7%) recorded the largest decreases,” the agency said.

Compared with February 2010, GDP was up 2.9% and industrial production rose 5.0%.

Derek Holt, vice president for economics at Toronto-based Scotia Capital, said the sequential decline from January “is a bit of a disappointment".

However, Holt said the comparison with January, when GDP grew 0.5%, is “distorted".

January’s growth was unusually high in that month because GDP bounced back from weak performances in November and December, when many plants cut production as a result of harsh weather and other factors, Holt said.

“Now, we have come back to reality,” he added.

Canada's central bank, the Bank of Canada, expects the country’s GDP to grow 2.9% in 2011 and 2.6% in 2012, it said in a monetary update earlier this month.

Canada will have a federal election on Monday, 2 May.

Prime Minister Stephen Harper’s minority Conservative government has based its campaign for re-election largely on its management of the economy during and after the global financial crisis, which affected Canada less than other industrial countries.

Read Paul Hodges’ Chemicals and the Economy Blog

By: Stefan Baumgarten
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