The latest reading of Canada’s economy brings both good and bad news for the housing market.
While growth slowed in February – to just 0.1% following a 0.3% rise in January – the weakness will almost certainly rule out any interest rate increases this year.
Statistics Canada’s GDP figures released Tuesday show a near-even split between gains and losses among the 20 main industrial sectors. Among the declining sectors were mining, quarrying, and oil & gas extraction; and the manufacturing sector.
“After roaring out of the gate at the start of the year, growth in the Canadian economy slipped in February. With economic growth remaining subdued, so too will price pressures and this will keep the Bank of Canada on the sidelines into next year,” commented Conference Board of Canada’s Principal Economist Alicia Macdonald.
He added that the data was in line with the Conference Board’s most recent forecast that expects economic growth to remain soft in the first quarter.
The winners and losers
Finance and insurance declined 0.6%, offsetting increases in the previous two months.
Construction was up 0.2%, marking a second gain following seven consecutive decreases. This was driven by increases in residential and industrial building activities.
Real estate, rental and leasing declined 0.2%, the first decrease since February 2018.
This was impacted by activity at offices of real estate agents and brokers which was down 6.6%, the fourth decline in five months due to lower housing resale activity in Ontario, Quebec, and British Columbia.
Retail sales were also up in February, posting their largest gain since last May although the increase was not enough to offset the sectors large decline in January, suggesting that growth in consumer purchases of goods will remain soft in the first quarter.