OTTAWA ? Thank factory workers and hockey players for no-small economic favours.
Canada began the new year with better-than-expected growth, supported by stronger manufacturing output and the return of National Hockey League games following a long labour dispute.
Adding to that, after three straight monthly declines, real estate agents and brokers were also back in play, although that could prove temporary.
Gross domestic product rose 0.2% in January, after contracting 0.2% in December and managing a 0.3% advance the month before that, Statistics Canada said Thursday. Most economists had expected an increase of just 0.1% GDP in January.
It was mostly manufacturing and a hockey lockout story
?It was mostly manufacturing and a hockey lockout story,? said Douglas Porter, chief economists at BMO Capital Markets.
Manufacturing rebounded with growth of 1.2% in the first month of 2013 ? accounting for about half of all of January?s output. That followed a see-saw performance in the last half of last year, which ended with a drop of 1.9% in December.
?We?ve started to see a little improvement in things like auto production and exports in recent months. And there are some signs the worst of the soft patch may be over in the Canadian economy,? Mr. Porter said.
The resumptions of NHL games after the player lockout boosted the arts, entertainment and recreation sector by 4.1% in January, pumping $441 million ? based on 2007 values used by Statistics Canada ? into the Canadian economy.
In the real estate market, meanwhile, output grew by 0.3% in January. Within that group, agents and brokers contributed 0.4% growth to the economy.
?I certainly wouldn?t hang my hat on the real estate sector leading us out of this,? Mr. Porter said.
?Where we can look for some support here is anything that?s levered to the U.S. economy, and manufacturing obviously fits that bill. And hockey, or course.?
Also Thursday, the Organization for Economic Co-operation and Development offered its assessment of Canada?s prospects, saying growth will be limited to 1.1% in the first three months of this year ? below forecasts for the U.S. and weaker than the average of all Group of Seven nations.
The Paris-based economic think-tank, however, said growth in Canada should pick up in the second quarter by as much as 1.9%.
Finance Minister Jim Flaherty said in his Budget 2013 that GDP would expand 1.6% for all of 2013. That is down from the minister?s previous estimate of 2% this year.
The budget forecasts growth of 2.5% next year, followed by 2.6% in 2015, before slowing to 2.4% in 2016.
Given the still-weak GDP growth, most economists do not expect the Bank of Canada to begin lifting its trendsetting interest rate from its current near-record low 1% until mid-2014.
Emanuella Enenajor, an economist at CIBC World Markets, said there is ?no need for the Bank of Canada to strengthen its barely-there bias for rate hikes.?
The bank will announced its next rate decision on April 17, along with its spring MPR economic and policy outlook.
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