The economy grew at an annualized rate of 3.1% in the first quarter, fueled by business investment and household spending, Statistics Canada said Tuesday.
The result signals a slowdown from the 6.6% economic growth recorded in the fourth quarter of 2021. The change came as export volumes fell 2.4% for the quarter, after climbing in the previous two quarters.
Paul Ashworth, chief economist for North America at Capital Economics, pointed out that growth for the first three months of the year was well below the consensus forecast, but remained broadly in line with the policy report. Bank of Canada April monetary policy.
“The unexpected weakness in GDP growth in the first quarter was mainly due to a downward revision to January data, which now shows a contraction of 0.2% month on month, as restrictions linked [au variant] Omicron have had a greater impact than previously thought,” Mr. Ashworth observed in a report.
However, he added that the real economy is still on solid footing, meaning the Bank of Canada can go ahead with a half-percentage-point hike in its key rate on Wednesday.
Increase in compensation
Statistics Canada also said employee compensation rose 3.8% on a nominal basis for the quarter. Excluding the third quarter of 2020, the federal agency noted that this was the largest quarterly increase since the second quarter of 1981. Significant wage growth was seen across the economy, the agency added, including in the professional and personal services, trade, manufacturing, health care and social assistance, and construction industries.
The overall first-quarter growth came as the economy advanced 0.7% in March.
Statistics Canada said its preliminary reading for April predicted economic growth of 0.2% for the month, but warned that this rate would be revised when its official data is released on June 30.
The reading on the economy comes ahead of the Bank of Canada’s interest rate announcement on Wednesday. Most economists expect the central bank to raise its key interest rate target by half a percentage point to 1.5% in a bid to curb inflation.