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Declines offset gains to drag economy down in Q2: StatsCan

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CANADA'S economy is headed for slower growth during the second quarter compared with the first, economists said Friday after gross domestic product gained 0.1 per cent in April.

The latest figures released by Statistics Canada indicate April was the fourth month of GDP growth in a row, driven largely by service industries.

However, economists pointed out April's gain, which fell in line with their expectations, was below increases of 0.2 per cent in March and 0.3 per cent in February.

CIBC economist Emanuella Enenajor said the figures suggest the economy's 2.5 per cent annualized growth rate during the first quarter "isn't set for a replay" during the quarter that ends June 30.

Statistics Canada said gains in wholesale and retail trade, finance and insurance, arts and entertainment and the transportation and warehousing sectors were partially offset by a decline in the public-administration sector.

Meanwhile, a decline in mining, quarrying and oil and gas extraction pushed goods production down by 0.3 per cent.

"April's drop in mining/oil and gas extraction suggests that the rebound in resource-sector production that propelled GDP growth in Q1 is no longer a tailwind for the economy," Enenajor said in a note.

There were also declines in construction, while manufacturing, utilities and the agriculture and forestry sectors posted gains, Statistics Canada said.

TD economist Francis Fong said temporary factors contributed to April's GDP growth.

For instance, a 3.4 per cent gain in the arts and recreation industry could be attributed to the extended NHL season, which had a delayed start in January because of a labour dispute.

"The overall picture is reflective of a more restrained second quarter for the Canadian economy," Fong wrote in a commentary.

"Domestic conditions remain moderate as households continue to curb their pace of debt growth. Meanwhile, the sequester in the U.S. (a series of automatic government spending cuts) is expected to temporarily weigh on economic growth south of the border -- this, in turn, will keep a lid on export growth in Q2."

-- The Canadian Press

Republished from the Winnipeg Free Press print edition June 29, 2013 B10

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