Economy beats expectations with 4.5% growth

Household spending, exports drive economy past expectations

Canada’s economy performed far better than expected in the second quarter, with growth at an annual rate of 4.5 per cent.

A consensus of economists had predicted the quarter would be 3.7 per cent, on par with the first quarter.

The two strong quarters give Canada its best economic start to a calendar year since 2002.

Statistics Canada says the increase in real gross domestic product in the second quarter was driven by household spending and exports, particularly in the form of energy products.

Exports expanded 2.3 per cent from April to June, up from 0.4 per cent in the first three months of the year.

The numbers also show households spent 1.9 per cent more on goods in the second quarter — the strongest gain since 2007.

The increase came even though housing investments contracted 1.2 per cent during a quarter that saw the introduction of a new tax on foreign buyers in Ontario. In comparison, residential real estate expanded 2.9 per cent in the first quarter.

The quarterly acceleration was also fuelled by an eighth-consecutive monthly increase in June that included a two per cent expansion in the construction sector — its largest gain in four years.

The Canadian Press