GDP growth in February: ’a ray of sunshine’

To recap:

• The Canadian economy beat the forecasts in February, growing 0.3 per cent following an upwardly revised gain of the same magnitude in January. It was the strongest two-month period of growth since July-August 2011.
• Most of the growth came from goods-producing industries, where activity rose 0.9 per cent. The strongest gains were in the resource sector, with output in mining, quarrying and oil and gas extraction jumping 2.2 per cent compared to January.
• Manufacturing also delivered a remarkable performance, with production rising 0.8 per cent.
• The service sector was overall virtually flat, inching up a mere 0.1 per cent. The arts and entertainment industry, however, bucked the trend, with a 3.3 per cent gain that likely reflects a recovery from the NHL lockout.

What the analysts are saying:

• The February release was "a ray of sunshine in an economy that needs all it can get," wrote CIBC’s Avery Shenfeld, who predicts first-quarter growth of two per cent. TD revised its expectation for the first three months of the year to two per cent as well, up from 1.6 per cent.
• Growth for the year seems to be on track to come in slightly above the latest Bank of Canada projection of a 1.5 per cent expansion, noted RBC’s Paul Ferley. The pickup, however, is unlikely to be enough to significantly reduce unemployment.
• "It’s not time to break out the champagne just yet," warned TD’s Leslie Preston. There are signs that the U.S. economy is slowing down, which could put the breaks on Canada’s momentum.