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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Canada's Economy Wilts

Wednesday, July 11, 2007 > 16:40:14
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(Source: Globe and Mail via I.E. Canada Daily e-news Bulletin: June 29, 2007)


Canadian economic growth stalled for the first time in 10 months amid a slowdown in wholesale trade — though the Bank of Canada is still seen raising interest rates next month.

 

Both the goods and services sides of the economy stood still, after the economy expanded 0.3-per-cent pace in March, Statistics Canada said Friday. It was the first month of no growth since June, 2006.

Economists had expected a rise of 0.2 per cent in April, with most cutting their forecasts last week after a report showed wholesale trade took its steepest dive in nearly four years. Many still expect the Bank of Canada to raise interest rates next month as inflation picks up and the labour market remains tight.

“This morning's release is unlikely to change the thinking at the Bank of Canada,” said Marc Lévesque, chief economics strategist at TD Securities, in a note. “The Canadian dollar is the one real wild card in this outlook.”

 

The Canadian dollar, which leaped almost a full cent yesterday, eased a bit to 94.25 cents (U.S.) Friday — after touching a new 30-year high earlier.

 

Rates may rise by a quarter percentage point on July 10, but the outlook for borrowing costs is fuzzy after that, an economist said.

 

“This soft report adds credence to our view that the bank may not need to go much beyond [a move in July],” said Sébastien Lavoie, an economist at Laurentian Bank. “A rate hike in September is now more doubtful.”

 

Now, all eyes are on the Bank of Canada's business outlook survey, due to be released Friday at 10:30 a.m. EDT.

 

Friday's numbers come after a report Thursday showed the U.S. economy grew at the slowest pace in four years in the first quarter — though most economists see a rebound in the second quarter.

In Canada, sectors that weakened in April were also oil and gas exploration, auto manufacturing, metal ore mining and the accommodation and food services sector, Statscan said.
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