Canada’s gross domestic product failed to grow for a second straight month in February, as the impact of plunging oil prices continued to hit key sectors of the economy.
Real GDP was unchanged in February, following a drop of 0.2 percent in January that was originally reported as a 0.1 percent decline, Statistics Canada reported on Thursday. A median estimate of economists called for a decline of 0.1 percent.
The service industries edged up 0.1 percent in February after declining 0.2 percent the previous month. Goods production fell 0.2 percent as a result of declines in manufacturing, mining and oil and gas extraction.
Thursday’s data are an extension of earlier comments made by Bank of Canada Governor Stephen Poloz, who warned of an “atrocious” first quarter for the economy. Many observers expects Canada’s GDP to contract in the first quarter before gradually recovering in the latter half of the year. The province of Alberta may not be so lucky, with the oil-rich region expected to enter a mild recession later this year.
Earlier this week Poloz defended the BOC’s rate cut in January and described the impacts of the oil price collapse as “complex.” Speaking before the House of Commons in Ottawa on Tuesday, Poloz said it “will take some time for [falling oil prices] to work their way through the economy.”
“While the impact of the oil price shock is happening faster than initially expected, it does not appear to be larger than we anticipated in January,” he added.
A disappointing first quarter of growth south of the border will likely translate into a very weak first quarter for the Canadian economy. The US economy expanded just 0.2 percent annually in the first three months of the year.
The Canadian dollar, which is trading at three-month highs against the greenback, was little changed on Thursday. The USDCAD advanced 0.1 percent to 1.2034, after falling to a low of 1.1949 on Wednesday.