Canada economy grew 5.6% in first-quarter: Statistics Canada
Its strength was in part due to low mortgage rates fueling strong demand for housing, continued government Covid aid to households and businesses, and an improved jobs market, Statistics Canada said in a release.
The figure, however, was about a percentage point lower than analysts had forecast, following a revised 9.3 percent uptick in GDP in the previous quarter.
"Canada's economy managed to shrug off a case of Covid in the winter, only to succumb to a harsher wave of the same disease in the spring," CIBC Economics analyst Avery Shenfeld said in a research note.
Still, growth was "healthy" in the quarter, he said, pointing to strong price gains, and Canadians staying in the country with reduced winter travel abroad helping to give a boost to "mediocre consumer spending."
According to Statistics Canada, the economy got a boost from a sharp increase in prices for construction materials and energy used in Canada and exported, as well as increased wages -- notably in construction and information and cultural industries.
Housing investments continued to rise for a third consecutive quarter, leading the recovery, but adding tens of billions of dollars in Canadians' residential mortgage debts.
Outlays for new vehicles, computers, games, toys, and hobbies, as well as sports and camping equipment, rose, but declined for clothing and footwear.
As consumers spent more time at home during the pandemic, spending on food and alcoholic beverages also increased.
Shenfeld noted that Canadians amassed significant savings during the pandemic, up 13 percent in the first quarter, but "that money won't be spent just yet," he said, as public health restrictions were still in place in much of the country heading into the second quarter.
"Investors will already be looking past Q2, with hopes that vaccinations will pave the way for much stronger growth again in the second half of the year," Shenfeld said after lockdowns were a drag on April growth.