(Adds Bank of Canada context and market reaction)
By Randall Palmer
OTTAWA, June 30 Lower oil and gas output caused
Canada's economic growth to come in lower than expected at 0.1
percent in April, according to Statistics Canada data on Monday,
extending a tepid performance that economists said could
reinforce central bank caution.
It matched March's rise and undershot market expectations of
0.2 percent growth. However, taken to a second decimal point,
growth was actually 0.14 percent. Excluding oil and gas
extraction, it was a more respectable 0.19 percent.
Economists said it suggested second-quarter growth of an
annualized 2 percent to 2.2 percent, and it might make the Bank
of Canada Governor Stephen Poloz revise down his second-quarter
estimate of 2.5 percent when he publishes his Monetary Policy
Report on July 16.
"Taken together with a slower Q1 (first quarter) outcome,
disappointment on growth will give the bank some maneuverability
to downplay the recent acceleration in core inflation at the
upcoming July meeting," TD Securities senior Canada macro
strategist Mazen Issa commented.
Year-on-year inflation came in at 2.3 percent in April, with
core inflation at 1.7 percent, its highest level since July
2012, numbers which had prompted some commentators to say Poloz
should tone down concerns over low inflation.
The output of services rose by 0.3 percent while
goods-producing industries fell by the same amount. In the goods
sector, only manufacturing rose, with mining, oil and gas,
agriculture and forestry, utilities and construction all down.
Oil and gas production fell by 0.8 percent during the month,
affected by maintenance at some petroleum facilities, Statistics
Canada said. Mining and quarrying fell by 1.3 percent. All the
data is adjusted for seasonal factors.
Year on year, overall growth stood at 2.1 percent. The
central bank has said there would need to be substantially
higher growth than that for much progress to be made in
eliminating the economy's output gap -- in other words, in
moving toward full potential.
The Canadian dollar quickly fell on the data to C$1.0696 to
the U.S. dollar, or 93.49 U.S. cents, from C$1.0680, or 93.63
U.S. cents just beforehand. Later in the morning the loonie
recouped its losses.
(Editing by Jeffrey Benkoe and W Simon)