3/31/2016, 4:44 PM (Source: TeleTrader)
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Canadian economy expands by 0.6%, loonie surges

The Canadian dollar surged on Thursday after latest data on the growth of the economy brought a pleasant surprise to the markets, and the Canadian media reported that "gloomy outlook" is all but gone.

The Canadian loonie strengthened 0.55% against its U.S. counterpart and 0.66% compared to the Japanese yen, rose 0.12% versus the euro by 4:42 p.m. CET (10:42 a.m. EST), after shortly reaching the highest level in the last eight months.

The reaction in the stock markets was a bit calmer. The Toronto's S&P/TSX Composite index rose 0.13% to 13,520 points by 4:28 p.m. CET (10:28 a.m. EST).

Real gross domestic product in Canada rose 0.6% in January. Production and retail industries were the major contributors for the growth of the economy in January, the fourth consecutive month in a row, according to data provided by Statistics Canada (StatCan) on Thursday.

Goods-producing industries grew 1.2%, thanks to advances in mining and manufacturing, followed by oil and gas extraction. There was a slower growth in utilities, construction, the agriculture and forestry. The service sector grew at the annual pace of 0.4%, mostly in retail, finance, insurance and public sectors (including education, health and public administration).

Manufacturing output expanded 1.9% in January, compared to 1.1% a month before. Durable-goods manufacturing rose 2.6% in January, after expanding 1.2% in previous month. Oil and gas extraction grew by 1.4% for the fourth consecutive month, mainly as a result of an increase in non-conventional oil extraction. Mining, oil and gas extraction activity saw a slowdown, from 6.8% in December to 2.3% in January, and most of that was concentrated in drilling activities; otherwise, it was hurt by mainly a decline in copper, nickel, lead and zinc.

Transportation and warehousing services rose 1.4% in January, thanks to gains in rail and pipeline transportation. It worth mentioning that the arts, entertainment and recreation sector decreased 1.2% in January.

Baha Breaking News (BBN) / ZR