OTTAWA – The Canadian economy shrank in the second quarter, the first quarterly fall since the 2008-09 recession, largely due to temporary factors such as Japan’s earthquake and tsunami, Statistics Canada said on Wednesday. Real gross domestic product fell at an annualized rate of 0.4% from the first quarter, worse than the median forecast of a 0.1% increase in a Reuters survey of economists. The first quarter grew by 3.6%. However, most economists expected a rebound in the third quarter from the temporary disruptions in the second. If this is the case, Canada would escape the technical definition of recession — two quarters of negative growth. The decline was marked by a 2.1% fall in export volume. This, in turn, was influenced by a supply disruption in the auto industry caused by the earthquake and tsunami, as well as wildfires and maintenance shutdowns that helped cut oil and gas extraction by 3.6%. Business investment, housing investment and consumer spending were all up in the quarter. For the month of June, Statscan said real GDP rose by 0.2% in June after a 0.3% fall in May, with the auto and gas industries posting rebounds.
© Thomson Reuters 2011
Don't need to say much more -- hate reprint, but anything else would just be a rewrite -- which is lamer. Bottom line is that Canada's Q1/11 +1% performance was followed by zero or close to zero growth in Q2. The question is what will happen in the second half of 2011, there the bets are off, housing in Canada is slowing, partly has a result of more stringent mortgage rules (30 year mortgage, sensitivity to higher mortgage rates). Finally, is the health of our No 1 export market: America.