The Canadian economy contracted in February led by another decline in the mining, quarrying and oil and gas extraction sector.
Statistics Canada reported Tuesday that GDP fell by 0.1 per cent following 0.3 per cent growth in January as both goods-producing and services-producing industries declined.
“Mining, quarrying and oil and gas extraction (-1.6 per cent) was down for the sixth consecutive month, as all subsectors declined,” said the federal agency. “The largest impact on the sector’s decline in February came from a 4.4 per cent decrease in mining and quarrying (except oil and gas), as nearly all types of mining were down due to lower international demand. Metal ore mining was down 4.8 per cent with reduced output of most types of metals. Non-metallic mineral mining decreased 3.7 per cent largely due to a 6.9 per cent contraction in potash mining as exports to the United States declined. Coal mining was down 6.1 per cent, the largest monthly decrease since November 2017.
“Oil and gas extraction was down 0.6 per cent in February, following a 2.6 per cent decline in January. Oil and gas extraction (except oil sands) was down 1.1 per cent as both natural gas and crude petroleum extraction fell. Following a 4.1 per cent contraction in January, oil sands extraction edged down 0.1 per cent in February as the Government of Alberta eased oil production cuts by 75,000 barrels a day on January 30. Support activities for mining, oil and gas extraction was down 0.6 per cent in February as growth in support activities for oil and gas extraction was more than offset by a decline in support activities for mining.”
StatsCan said transportation and warehousing was down 1.6 per cent in February, the largest decline since June 2011, largely due to a 10.8 per cent drop in rail transportation.
“There were widespread declines in rail movement of products, such as iron ore, potash and fuel oils and crude petroleum. Cold weather and heavy snowfalls across many parts of the country and a train derailment near Field, British Columbia that closed an important rail line through the Canadian Rockies in the early part of the month all had adverse effects on rail transportation,” it explained.
Royce Mendes, an economist with CIBC, said the GDP report will take tracking forecasts of the Canadian economy below one per cent for first quarter of this year, closer in line with the Bank of Canada’s downbeat projection.
“Given that the miss came from two volatile sectors, however, market reaction could prove somewhat limited,” he wrote in a commentary note.
Mario Toneguzzi is a Troy Media business reporter based in Calgary.
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