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UPDATE 1-Canada growth jumps in January, dimming chances of rate cut

Published 2016-03-31, 08:40 a/m
© Reuters. UPDATE 1-Canada growth jumps in January, dimming chances of rate cut

(Adds details of release, background)
OTTAWA, March 31 (Reuters) - Canada's economy grew by a much
larger-than-expected 0.6 percent in January, Statistics Canada
data indicated on Thursday, reducing the odds that the Bank of
Canada will need to cut interest rates further this year.
Market operators polled by Reuters had forecast a 0.3
percent increase from December. January's gain - the fourth in a
row - was the largest since the 0.6 percent advance seen in July
2013.
The Bank of Canada, which cut rates twice last year to help
counter the effects of a slump in oil prices, is currently
predicting first quarter growth of just 1 percent. The January
data suggests first-quarter growth could be markedly higher.
The central bank's next rate announcement is on April 13,
when it will also release an updated economic forecast.
Statscan said manufacturing, retail trade, mining, quarrying
and oil and gas extraction were major contributors to growth in
January. The output of goods-producing industries rose by 1.2
percent while service-producing industries rose by 0.4 percent.
Output in the manufacturing sector - which was pummeled by a
high Canadian dollar and weak markets after the 2008 financial
crisis - expanded by 1.9 percent in January. The Canadian
currency weakened markedly as oil prices slid, making exports
more competitive.

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