Canadian economy grew 0.2% in February

The Canadian economy grew a modest 0.2 per cent in February, withearlyestimates for March indicating little change to theGDP,Statistics Canada said on Tuesday.

The February figures were a tick lower than analysts expected. The economy had a strongJanuary, growing 0.5 per cent (downwardly revised from 0.6 per cent). That was largely thanks toa rebound in educational services after public sector strikes ended in Quebec.

"The start of 2024 looks eerily similar to 2023, when the economy started the year with a bang, only to stall after [the first quarter]," wrote BMO economist Benjamin Reitzes in a note.

The loss of momentum puts additional pressure on the Bank of Canada to start cutting interest rates in June, though a move on the central bank's part still largely depends on whether inflation continues to cool, Reitzes wrote.

WATCH | Canada's headline inflation ticked up to 2.9 per cent in March:

Canada's inflation rate ticks up to 2.9% in March

2 months ago

Duration 1:32

The consumer price index shows inflation was at 2.9% in March compared to the year before, a slight increase compared to February. Statistics Canada said gasoline prices, mortgage interest costs and rent contributed to the increased inflation rate.

StatsCan estimated that the economy expanded at an annualized rate of 2.5 per cent in the first quarter.

Gains in transportation and warehousing

The economic expansion in February came as services-producing industries increased 0.2 per cent, helped by gains in transportation and warehousing.

Transportation and warehousinggrew 1.4 per cent, a pace that the data agency said was the largest monthly growth rate since January2023.

Rail transportation alsocontributed significantlyto that sector's growthin February, eking outa 5.5 per cent gain as it rebounded from a January cold snap.

Meanwhile, air transportation grew 4.8 per cent as demand for international travel rose, with airlinesadding more flights to Asia in the lead-up to the Lunar New Year and pipeline transportation rose 1.6 per cent, offsetting January's decline.

Goods-producing industries were essentially unchanged as the mining, quarrying, and oil and gas extraction sector grew and the utilities and manufacturing sectors contracted, according to StatsCan.

The public sector grew at a slower pace in February (0.2 per cent) after a 1.9 per cent increase the previous month.

Overall, the agency recordedgrowth in 12 out of 20 sectors.