A surge in Canadian oil exports to the U.S. helped propel the country’s economy in the first quarter to its fastest growth pace since 2011, even as domestic demand expanded at the slowest rate since the 2009 recession.
Gross domestic product grew at a 2.5 percent annualized pace from January to March, the fastest in six quarters, after a revised 0.9 percent gain in the fourth quarter, Statistics Canada said today from Ottawa.
The three-month period ended with a 0.2 percent increase in output in March.Canadian oil producers ramped up shipments to the U.S., taking advantage of new pipeline capacity and rebounding from temporary maintenance shutdowns that curbed output last year, to help the country rebound from the slowest six-month expansion since the recession.
“It’s a great start to the year,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia (BNS) in Toronto.
“Details are strong, exports are strong.”
The Canadian dollar pared losses against its U.S. peer after the report. The currency was down 0.1 percent to C$1.0308 per U.S. dollar at 8:45 a.m. in Toronto trading, after falling as much as 0.7 percent today.
One Canadian dollar buys 97.01 U.S. cents. Economists surveyed by Bloomberg News projected a 2.3 percent quarterly increase in gross domestic product, according to the median of 24 estimates. Output in March was projected to increase 0.1 percent.
Outpaced U.S.
The increase marked the second straight quarter that Canada’s economy has outpaced the U.S., where a Commerce Department report yesterday showed growth of 2.4 percent in the first quarter.
David Watt, chief economist at HSBC Bank Canada in Toronto, cited increased production and the reversal of the Seaway pipeline last year by Enterprise Products Partners LP (EPD) and Enbridge Inc. (ENB), which moved more crude to the Houston area from Cushing, Oklahoma, for the increase in oil exports at the beginning of this year.
There was a “mini-boom in Canadian oil exports to the U.S.,” Watt said before the release. Total exports of goods and services rose at a 6.2 percent annualized pace in the first quarter, the fastest pace since the last three months of 2011.
Canada’s share of U.S. crude oil imports rose to 38.7 percent in February, the highest in at least two decades according to U.S. Energy Information Administration data.
Oil Volumes
Crude oil export volumes jumped 8.2 percent to a record in the first quarter on a non-annualized basis, while natural gas exports were up 9.7 percent over the period, according to Statistics Canada data released before today’s report.
Exports of energy products rose 21.9 percent in the first quarter on an annualized basis, Statistics Canada said today. Increased output in mining and oil and gas extraction helped lead growth in March, Statistics Canada said, marking the third straight monthly expansion.
Canada will increasingly rely on a rebound in the U.S. to power its economy, the Bank of Canada projects, as household consumption slows and governments rein in spending.
Final domestic demand -- an aggregate of consumption, government spending and business investment -- rose at a 0.6 percent annualized pace in the first quarter, the slowest since the first quarter of 2009, amid a cooling housing market and reduced spending growth by households carrying record debts, the statistics agency said.
Household Spending
Household consumption grew at an annualized 0.9 percent in the first quarter, less than half the 2.2 percent pace in the final three months of 2012.
Home construction, which helped lift the economy out of recession, fell for a third straight quarter at the beginning of this year, falling at a 4.7 percent rate between January and March.
Capital spending growth by businesses outside of home construction also slowed, growing at a 0.7 percent annualized pace in the first quarter.
That’s down from a 5.2 percent rate in the previous quarter. The economy also got a boost from businesses adding C$2.16 billion ($2.09 billion) to inventories in the first quarter, after drawing down C$10.2 billion from October to December.
While picking up steam in the first quarter, the economy may struggle to reach the growth rate of its potential for all of 2013, which the Bank of Canada projects at about 2.1 percent.
Canada’s economic growth, estimated at 1.5 percent in 2013, will be the slowest among Group of 20 countries outside Europe, according to estimates released by the International Monetary Fund in April.
bloomberg.com
Gross domestic product grew at a 2.5 percent annualized pace from January to March, the fastest in six quarters, after a revised 0.9 percent gain in the fourth quarter, Statistics Canada said today from Ottawa.
The three-month period ended with a 0.2 percent increase in output in March.Canadian oil producers ramped up shipments to the U.S., taking advantage of new pipeline capacity and rebounding from temporary maintenance shutdowns that curbed output last year, to help the country rebound from the slowest six-month expansion since the recession.
“It’s a great start to the year,” said Camilla Sutton, head of currency strategy at Bank of Nova Scotia (BNS) in Toronto.
“Details are strong, exports are strong.”
The Canadian dollar pared losses against its U.S. peer after the report. The currency was down 0.1 percent to C$1.0308 per U.S. dollar at 8:45 a.m. in Toronto trading, after falling as much as 0.7 percent today.
One Canadian dollar buys 97.01 U.S. cents. Economists surveyed by Bloomberg News projected a 2.3 percent quarterly increase in gross domestic product, according to the median of 24 estimates. Output in March was projected to increase 0.1 percent.
Outpaced U.S.
The increase marked the second straight quarter that Canada’s economy has outpaced the U.S., where a Commerce Department report yesterday showed growth of 2.4 percent in the first quarter.
David Watt, chief economist at HSBC Bank Canada in Toronto, cited increased production and the reversal of the Seaway pipeline last year by Enterprise Products Partners LP (EPD) and Enbridge Inc. (ENB), which moved more crude to the Houston area from Cushing, Oklahoma, for the increase in oil exports at the beginning of this year.
There was a “mini-boom in Canadian oil exports to the U.S.,” Watt said before the release. Total exports of goods and services rose at a 6.2 percent annualized pace in the first quarter, the fastest pace since the last three months of 2011.
Canada’s share of U.S. crude oil imports rose to 38.7 percent in February, the highest in at least two decades according to U.S. Energy Information Administration data.
Oil Volumes
Crude oil export volumes jumped 8.2 percent to a record in the first quarter on a non-annualized basis, while natural gas exports were up 9.7 percent over the period, according to Statistics Canada data released before today’s report.
Exports of energy products rose 21.9 percent in the first quarter on an annualized basis, Statistics Canada said today. Increased output in mining and oil and gas extraction helped lead growth in March, Statistics Canada said, marking the third straight monthly expansion.
Canada will increasingly rely on a rebound in the U.S. to power its economy, the Bank of Canada projects, as household consumption slows and governments rein in spending.
Final domestic demand -- an aggregate of consumption, government spending and business investment -- rose at a 0.6 percent annualized pace in the first quarter, the slowest since the first quarter of 2009, amid a cooling housing market and reduced spending growth by households carrying record debts, the statistics agency said.
Household Spending
Household consumption grew at an annualized 0.9 percent in the first quarter, less than half the 2.2 percent pace in the final three months of 2012.
Home construction, which helped lift the economy out of recession, fell for a third straight quarter at the beginning of this year, falling at a 4.7 percent rate between January and March.
Capital spending growth by businesses outside of home construction also slowed, growing at a 0.7 percent annualized pace in the first quarter.
That’s down from a 5.2 percent rate in the previous quarter. The economy also got a boost from businesses adding C$2.16 billion ($2.09 billion) to inventories in the first quarter, after drawing down C$10.2 billion from October to December.
While picking up steam in the first quarter, the economy may struggle to reach the growth rate of its potential for all of 2013, which the Bank of Canada projects at about 2.1 percent.
Canada’s economic growth, estimated at 1.5 percent in 2013, will be the slowest among Group of 20 countries outside Europe, according to estimates released by the International Monetary Fund in April.
bloomberg.com
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