Canada reported first quarter GDP numbers last week and the country’s production didn’t increase as fast as economists had predicted they would. Dragging on the numbers was lower housing investment, a result of tighter regulation of mortgages in the Great White North. Kim Mackrael reports for The Wall Street Journal:
Canada’s economy expanded at a slower pace than expected in the first quarter, as housing investment dropped sharply following the introduction of tougher mortgage rules.
Weaker consumer spending and lower exports of non-energy products also weighed on growth.
Canada’s gross domestic product, or the broadest measure of goods and services produced in an economy, rose at a 1.3% annualized rate in the first quarter of 2018, to 1.877 trillion Canadian dollars ($1.455 trillion), Statistics Canada said Thursday. The gain matched an earlier forecast by the Bank of Canada, but fell short of market expectations for a 1.9% advance, according to economists at Royal Bank of Canada .
In comparison, the U.S. economy advanced 2.2% in the first three months of 2018.
The Canadian data come one day after the Bank of Canada kept its benchmark interest rate on hold at 1.25%. Economists and traders interpreted an upbeat statement from the central bank, issued alongside its rate decision, as a sign that a rate increase is likely at the next policy announcement in July.
The Bank of Canada lifted interest rates three times between last summer and January 2018, after keeping them at ultralow levels for years. Policy makers have indicated that they plan to move rates higher but say they will do so gradually, in part because heavily indebted households may be more sensitive to rising rates.
Read more here.