December 11, 2013 Sections
Winnipeg Free Press - PRINT EDITION
OTTAWA -- Canada's recovering economy hit a pothole, with a report Friday showing activity in the country's factories slumped 2.4 per cent in April, the worst decline in nearly four years.
Statistics Canada also said the manufacturing sector suffered an even worse March than previously reported, with sales falling by twice as much as the original 0.3 per cent estimate.
The double whammy constitutes a setback to an economy that was thought to be performing better than expected given the 2.5 per cent growth spurt in the first three months of 2013, strong housing starts and 95,000 new jobs created in May.
Analysts said the manufacturing data likely signal a return to previous expectations of a weak first half to the year, with the pace picking up toward the latter part of 2013.
The Conference Board of Canada's outlook released Friday says the economy will likely be receiving a boost from stronger U.S. demand for Canadian products, but not until 2014.
The Ottawa-based think-tank estimates Canada's growth rate at 1.8 per cent in 2013, the same as last year and four-tenths of a point below its previous call, before hitting 2.5 per cent in 2014.
"Overall, Canada's domestic economy is not expected to muster enough strength to get growth... above two per cent this year," said economist Pedro Antunes, the think-tank's director of national and provincial forecasting. "The stronger pace of U.S. growth in 2014 should help lift spirits, resource prices, trade prospects and income here at home," he added.
April's decline was the fourth in five months. In terms of volumes, shipments are down 3.5 per cent in the past year. The drop was broad-based, with 13 of 21 industries representing about 86 per cent of manufacturing declining, led by an 8.8 per cent slide in petroleum and coal products sales.
There was also good news Friday. The International Monetary Fund reported the U.S. economy is on a sounder footing than a year ago, although recent tax increases and government spending cuts could shave 1.5 per cent from growth this year. Once those impacts fade, the economy should accelerate to a 2.7 per cent rate, the IMF said.
-- The Canadian Press
Republished from the Winnipeg Free Press print edition June 15, 2013 B10