Canada Economy Grew 2.9% in Second Quarter
Canada's economy grew at an annual rate of 2.9 percent in the second quarter, lifted by a rise in exports and services, the national statistical agency said Thursday.
The increase was slightly less than expected by analysts, who had projected growth of three percent during the three months ending June 30.
Growth was mainly driven by an increase in export volumes -- up 2.9 percent and the largest gain in four years, according to Statistics Canada.
Exports in the quarter were led by energy products. Foreign sales of pharmaceutical products and business jets also contributed to the rise and the outpacing of a small uptick in imports.
Consumer spending was also up, largely due to higher housing and utility costs (water, electricity and gas), reversing a downward trend over the previous three quarters.
Business investments, however, slowed in the quarter.
These figures "are enough reason for the Bank of Canada to wait until October to hike (its key lending rate) again," CIBC Economics analyst Avery Shenfeld said, "particularly if we don't get a clear and favorable outcome to NAFTA and the tariffs on steel/aluminum are left in place."
The central bank hiked its benchmark rate to 1.5 percent in July -- its highest level in a decade, following a previous rate increase in January.
Canadian trade negotiators were in Washington on Thursday seeking a breakthrough in talks to revamp North American Free Trade Agreement (NAFTA), after the U.S. announced on Monday a deal with Mexico.
U.S. President Donald Trump has threatened to impose tariffs on Canadian automobiles and parts if an agreement is not reached soon, and has made the removal of steel and aluminum tariffs conditional on that outcome.
Optimism has picked up after Canada signaled a deal was possible by Friday.