The Canadian economy rebounded strongly from a soft first quarter, expanding at a robust 3.1 per cent annual rate in the second quarter of 2014. Growth was led higher by rising household consumption and in particular by a sharp 4.2 per cent increase in exports. That increase is largely owing to a similarly strong rebound in economic growth in the United States that saw the economy grow over 4 per cent last quarter.
Second quarter growth in the Canadian economy far exceeded expectations and was the highest since the third quarter of 2011. That said, average growth in the first half of the year was only about 2 per cent given a weak reading of just 0.9 per cent growth in the first quarter. While the strength of today's GDP data may somewhat complicate thinking at the Bank of Canada, softness in the labour market as well as still below target core inflation will likely tilt the Bank towards holding rates unchanged for the remainder of the year.
Copyright BCREA - reprinted with permission
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