Written BY: Logan Broyles
Canada’s manufacturing sector has led the economy toward continued strength. Expanding 0.5 per cent in January, this growth matches previous economic forecasts.
This expansion, although predicted, was almost a surprise. Economists have been worried that retail sales 0.3 per cent decline during the month would affect the overall result. Luckily, the automotive industry came to the rescue with 2.8 per cent growth in January. There’s been additional strength in the manufacturing, transportation and wholesale trade industries. These sectors are what pushed Canada’s gross domestic product to its total 0.5 per cent rise. Fortunately, the oil price increase’s impact on the economy has been minimal.
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This rise is similar to December’s figures, pointing toward a recovering economy. Although predictions are never perfect, Canada’s economy is expected to grow through Q1 of 2011 and is on track for a potential four per cent rise also in the first quarter. A potential disruption due to the Japan earthquake and tsunami disaster as well as global turmoil may have detrimental effects to the economy in Q2, but only time will tell.
This new data points to the Bank of Canada revisiting its lukewarm analysis of the economy taken in January. Previously predicted to have 2.4 per cent growth, economists are readjusting their forecasts to suggest, instead, a rise to three per cent. It is speculated, though, that the Bank of Canada may wait to readjust its prediction until after Canada’s own political turmoil ends after elections in May.