Ottawa, Ontario, May 31, 2006--Canada's economy powered ahead by a stronger-than-expected 3.8 percent on an annualized basis in the first quarter, thanks to a rebound in housing investment and a pick-up consumer spending, Statistics Canada said on Wednesday.
The growth rate, up from 2.5 percent in the fourth quarter of 2005, beat the average forecast of 3.0 percent in a Reuters poll.
"It's certainly stronger than expected, showing pretty good momentum in the economy," said Sal Guatieri, senior economist at BMO Nesbitt Burns.
"It raises the risk of the Bank of Canada extending its tightening cycle. But I think a lot will come down to second-quarter numbers."
Statscan said the domestic economy grew 0.9 percent in January-March compared with the previous quarter as the strong investment offset stalling exports.
In March, gross domestic product expanded 0.1 percent, down from 0.3 percent in February, the agency said.
Investment in residential structures rebounded in the first quarter after stalling in the fourth quarter. "This 3.4 percent first-quarter increase was the strongest quarterly advance in more than two years," Statscan said.
Economy-wide prices as measured by the implicit price index for GDP, fell 0.7 percent in the quarter due to declining energy prices. The index had risen in at least the previous five quarters.
