Canadian Economy Grows for Fourth Straight Month in January
The Canadian economy grew for the fourth consecutive month, data released today showed. Manufacturing led the surge, boosting overall output by 0.5 percent in January. The pace at which the economy expanded fell in line with analysts’ expectations, according to a Bloomberg News survey. Manufacturing expanded by 2.8 percent in January, the quickest pace of expansion since September 2003. The jump marks a significant increase over the 0.8 percent growth in manufacturing in December. On an annualized rate, the economy grew at a pace of 3.3 percent during the 4th quarter of 2010, according to data released on February 28, following the largest jump in exports since 2004. However, a stronger Loonie could restrain further growth, as the trade balance is likely to suffer as foreigners purchase fewer Canadian goods.
Canadian GDP (YoY): March 2007 to Present
While it is clear that the United States’ neighbor to the north has comfortably climbed out of the recession, with moderate growth having resumed coupled with the fact that Canada is the only country to have regained all of its lost laborers during the recession, the recovery remains fragile. Speculators bidding up the Loonie in recent weeks will likely have a negative effect on the country’s growth, with exports expected to fall on a stronger Canadian Dollar. Moreover, the growth figures could have an effect on Prime Minister Stephen Harper’s bid for reelection, after the conservative government was ousted by opposition parties. Harper has called the recovery “fragile,” after the Canadian legislature rejected the budget proposal, ending the C$7.6 billion Canadian stimulus plan.
Following the release of the news, while the Loonie fell slightly against its American counterpart, at the time this report was written, it was unchanged from the five minute period before the release.
Written by Christopher Vecchio, DailyFX Research.
To contact the author of this report, please send inquiries to: email@example.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.